AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 29, 1994
FILE NO. 2-69062
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- -----------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X
PRE-EFFECTIVE AMENDMENT NO. / /
POST-EFFECTIVE AMENDMENT NO. 16 X
AND/OR
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940 X
AMENDMENT NO. 18 X
(CHECK APPROPRIATE BOX OR BOXES)
------------------------
MERRILL LYNCH SERIES FUND, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
BOX 9011 08540-9011
PRINCETON, NEW JERSEY (ZIP CODE)
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (609) 282-2800
TERRY K. GLENN
800 SCUDDERS MILL ROAD
PLAINSBORO, NEW JERSEY 08536
(NAME AND ADDRESS OF AGENT FOR SERVICE)
PHILIP L. KIRSTEIN, ESQ. LEONARD B. MACKEY, JR., ESQ.
MERRILL LYNCH ASSET MANAGEMENT ROGERS & WELLS
BOX 9011 200 PARK AVENUE
PRINCETON, NEW JERSEY 08540-9011 NEW YORK, NEW YORK 10166
IT IS PROPOSED THAT THIS FILING WILL BECOME EFFECTIVE (CHECK APPROPRIATE BOX)
X immediately upon filing pursuant to paragraph (b)
/ / on (date) pursuant to paragraph (b)
/ / 60 days after filing pursuant to paragraph (a)
/ / on (date) pursuant to paragraph (a) of rule 485.
THE REGISTRANT HAS REGISTERED AN INDEFINITE NUMBER OF ITS SHARES UNDER THE
SECURITIES ACT OF 1933 PURSUANT TO RULE 24F-2 UNDER THE INVESTMENT COMPANY ACT
OF 1940. THE NOTICE REQUIRED BY SUCH RULE FOR THE REGISTRANT'S MOST RECENT
FISCAL YEAR WAS FILED ON FEBRUARY 28, 1994.
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<PAGE>
(Continued from previous page)
CALCULATION OF REGISTRATION FEE
<TABLE> <CAPTION>
PROPOSED
AMOUNT PROPOSED MAXIMUM
OF SHARES MAXIMUM AGGREGATE AMOUNT OF
TITLE OF SECURITIES BEING OFFERING PRICE OFFERING REGISTRATION
BEING REGISTERED REGISTERED PER SHARE* PRICE FEE
<S> <C> <C> <C> <C>
(1) Shares of Money Reserve Portfolio
Common Stock, par value $0.10 per share......... 277,435,808 $ 1.00 $ 36,250.00
A
B
(2) Shares of Capital Stock Portfolio
Common Stock, par value $0.10 per share......... 1,451,455 $ 21.92 $ 36,233.76 B
B
(3) Shares of Multiple Strategy Portfolio
Common Stock, par value $0.10 per share......... 5,634,358 $ 16.61 $ 36,243.02 B
B
(4) Shares of High Yield Portfolio Common
Stock, par value $0.10 per share................ 2,576,016 $ 9.15 $ 36,243.15 B
B
(5) Shares of Natural Resources Portfolio
Common Stock, par value $0.10 per share......... 651,349 $ 7.43 $ 36,243.54 C$100
B
(6) Shares of Intermediate Government Bond
Portfolio Common Stock, par value $0.10 per B
share........................................... 3,244,833 $ 10.92 $ 36,243.48 B
B
(7) Shares of Long Term Corporate Bond
Portfolio Common Stock, par value $0.10 per B
share........................................... 1,711,272 $ 11.35 $ 36,240.55 B
B
(8) Growth Stock Portfolio Common Stock, par
value $0.10 per share........................... 1,143,589 $ 18.50 $ 36,241.50 D
</TABLE>
* Calculated as of April 26, 1993.
(1) The calculation of the maximum aggregate offering price is made pursuant to
Rule 24e-2 under the Investment Company Act of 1940. The total amount of
Money Reserve Portfolio Common Stock redeemed or repurchased during
Registrant's previous fiscal year was 277,399,558 shares. None of these
shares have been used for reductions pursuant to Rule 24e-2(a) or Rule
24f-2(c) under the Investment Company Act of 1940 in previous filings during
Registrant's current fiscal year. 277,399,558 shares of Money Reserve
Portfolio Common Stock redeemed during Registrant's previous fiscal year are
being used for the reduction of the registration fee in this post-effective
amendment.
(2) The calculation of the maximum aggregate offering price is made pursuant to
Rule 24e-2 under the Investment Company Act of 1940. The total amount of
Capital Stock Portfolio Common Stock redeemed or repurchased during
Registrant's previous fiscal year was 3,146,632 shares. Of such amount,
1,696,833 shares have been used for reductions pursuant to Rule 24e-2(a) or
Rule 24f-2(c) under the Investment Company Act of 1940 in previous filings
during Registrant's current fiscal year. 1,449,802 shares of Capital Stock
Portfolio Common Stock redeemed during Registrant's previous fiscal year are
being used for the reduction of the registration fee in this post-effective
amendment.
(3) The calculation of the maximum aggregate offering price is made pursuant to
Rule 24e-2 under the Investment Company Act of 1940. The total amount of
Multiple Strategy Portfolio Common Stock redeemed or repurchased during
Registrant's previous fiscal year was 5,632,176 shares. None of these shares
have been used for reductions pursuant to Rule 24e-2(a) or Rule 24f-2(c)
under the Investment Company Act of 1940 in previous filings during
Registrant's current fiscal year. 5,632,176 shares of Multiple Strategy
Portfolio Common Stock redeemed during Registrant's previous fiscal year are
being used for the reduction of the registration fee in this post-effective
amendment.
(4) The calculation of the maximum aggregate offering price is made pursuant to
Rule 24e-2 under the Investment Company Act of 1940. The total amount of
High Yield Portfolio Common Stock redeemed or repurchased during
Registrant's previous fiscal year was 5,176,485 shares. Of such amount,
2,604,430 shares have been used for reductions pursuant to Rule 24e-2(a) or
Rule 24f-2(c) under the Investment Company Act of 1940 in previous filings
during Registrant's current fiscal year. 2,572,055 shares of High Yield
Portfolio Common Stock redeemed during Registrant's previous fiscal year are
being used for the reduction of the registration fee in this post-effective
amendment.
(5) The calculation of the maximum aggregate offering price is made pursuant to
Rule 24e-2 under the Investment Company Act of 1940. The total amount of
Natural Resources Portfolio Common Stock redeemed or repurchased during
Registrant's previous fiscal year was 3,013,454 shares. Of such amount,
2,366,983 shares have been used for reductions pursuant to Rule 24e-2(a) or
Rule 24f-2(c) under the Investment Company Act of 1940 in previous filings
during Registrant's current fiscal year. 646,471 shares of Natural Resources
Portfolio Common Stock redeemed during Registrant's previous fiscal year are
being used for the reduction of the registration fee in this post-effective
amendment.
(6) The calculation of the maximum aggregate offering price is made pursuant to
Rule 24e-2 under the Investment Company Act of 1940. The total amount of
Intermediate Government Bond Portfolio Common Stock redeemed or repurchased
during Registrant's previous fiscal year was 3,241,514 shares. None of these
shares have been used for reductions pursuant to Rule 24e-2(a) or Rule 24f-
2(c) under the Investment Company Act of 1940 in previous filings during
Registrant's current fiscal year. 3,241,514 shares of Intermediate
Government Bond Portfolio Common Stock redeemed during Registrant's previous
fiscal year are being used for the reduction of the registration fee in this
post-effective amendment.
(7) The calculation of the maximum aggregate offering price is made pursuant to
Rule 24e-2 under the Investment Company Act of 1940. The total amount of
Long Term Corporate Bond Portfolio Common Stock redeemed or repurchased
during Registrant's previous fiscal year was 1,708,079 shares. None of these
shares have been used for reductions pursuant to Rule 24e-2(a) or Rule 24f-
2(c) under the Investment Company Act of 1940 in previous filings during
Registrant's current fiscal year. 1,708,079 shares of Long Term Corporate
Bond Portfolio Common Stock redeemed during Registrant's previous fiscal
year are being used for the reduction of the registration fee in this
post-effective amendment.
(8) The calculation of the maximum aggregate offering price is made pursuant to
Rule 24e-2 under the Investment Company Act of 1940. The total amount of
Growth Stock Portfolio Common Stock redeemed or repurchased during
Registrant's previous fiscal year was 3,907,138 shares. Of such amount,
2,765,508 shares have been used for reductions pursuant to Rule 24e-2(a) or
Rule 24f-2(c) under the Investment Company Act of 1940 in previous filings
during Registrant's current fiscal year. 1,141,630 shares of Growth Stock
Portfolio Common Stock redeemed during Registrant's previous fiscal year are
being used for reduction of the registration fee in this post-effective
amendment.
<PAGE>
MERRILL LYNCH SERIES FUND, INC.
CROSS REFERENCE SHEET
<TABLE> <CAPTION>
FORM N-1A ITEM LOCATION
- -------------------------------------------------------------- --------------------------------------------------
<S> <C> <C>
PART A
1. Cover Page........................................ Cover Page
2. Fee Table/Synopsis................................ *
3. Financial Highlights.............................. Financial Highlights; Performance Data
4. General Description of Registrant................. Investment Objectives and Policies of the
Portfolios; Additional Information
5. Management of the Fund............................ Investment Adviser; Directors; Portfolio
Transactions and Brokerage; Additional
Information
6. Capital Stock and Other Securities................ Cover Page; Dividends, Distributions and Taxes;
Additional Information
7. Purchase of Securities Being Offered.............. Purchase of Shares; Additional Information
8. Redemption or Repurchase.......................... Redemption of Shares
9. Pending Legal Proceedings......................... *
PART B
10. Cover Page........................................ Cover Page
11. Table of Contents................................. Table of Contents
12. General Information and History................... Additional Information
13. Investment Objectives and Policies................ Investment Objectives and Policies; Investment
Restrictions; Portfolio Transactions and
Brokerage
14. Management of the Fund............................ Management of the Fund
15. Control Persons and Principal Holders of
Securities........................................ Management of the Fund; Additional Information
16. Investment Advisory and Other Services............ Management of the Fund; Investment Advisory
Arrangements
17. Brokerage Allocation and Other Practices.......... Portfolio Transactions and Brokerage
18. Capital Stock and Other Securities................ *
19. Purchase, Redemption and Pricing of Securities
Being Offered..................................... Purchase of Shares; Determination of Net Asset
Value; Redemption of Shares
20. Tax Status........................................ Dividends, Distributions and Taxes
21. Underwriters...................................... Distributor
22. Calculation of Performance Data................... Performance Data
23. Financial Statements.............................. Financial Statements
</TABLE>
PART C
Information required to be included in Part C is set forth under the
appropriate Item, so numbered in Part C to this Registration Statement.
- ------------
* Item inapplicable or answer negative.
<PAGE>
PROSPECTUS
APRIL 29, 1994
MERRILL LYNCH SERIES FUND, INC.
BOX 9011, PRINCETON, NEW JERSEY 08540-9011 . PHONE NO. (609) 282-2800
Merrill Lynch Series Fund, Inc. (the "Fund") is an open-end management
investment company which is intended to meet a wide range of investment
objectives with its ten separate portfolios (hereinafter referred to as the
"Portfolios" or individually as a "Portfolio"). Each Portfolio is in effect a
separate fund issuing its own shares. The shares of the Fund are sold only to
separate accounts (the "Separate Accounts") of the Merrill Lynch Insurance
Companies, as defined below, and Monarch Life Insurance Company's Variable
Account A (collectively, the "Accounts") to fund the benefits under Variable
Life Insurance Policies (the "Policies") issued by Merrill Lynch Life Insurance
Company and ML Life Insurance Company of New York, indirect wholly owned
subsidiaries of Merrill Lynch & Co., Inc. (collectively, the "Merrill Lynch
Insurance Companies"), and Monarch Life Insurance Company ("Monarch" and,
together with the Merrill Lynch Insurance Companies, the "Insurance Companies").
The Accounts invest in shares of the Fund in accordance with allocation
instructions received from Policyowners. Such allocation rights are further
described in the accompanying Prospectus for the Policies. The Insurance
Companies redeem shares to the extent necessary to provide benefits under the
Policies. The investment objectives of the Portfolios are as follows:
Money Reserve Portfolio. Preservation of capital, liquidity and the
highest possible current income consistent with the foregoing objectives by
investing in short-term money market securities.
Intermediate Government Bond Portfolio. Highest possible current
income consistent with the protection of capital afforded by investing in
intermediate-term debt securities issued or guaranteed by the United States
Government or its agencies.
Long-Term Corporate Bond Portfolio. As high a level of current income
as is consistent with prudent investment risk by investing primarily in
fixed-income, high quality corporate bonds.
High Yield Portfolio. High current income, consistent with prudent
investment management, by investing principally in fixed-income securities
rated in the lower categories of the established rating services.
Capital Stock Portfolio. Long-term growth of capital and income, plus
moderate current income principally by investing in common stocks which are
considered to be of good or improving quality or which are thought to be
undervalued based on criteria such as historical price/book value ratios
and price/earnings ratios.
Growth Stock Portfolio. Above average long-term growth of capital by
investing primarily in common stocks of aggressive growth companies that
are considered to have special growth potential.
Multiple Strategy Portfolio. Highest total investment return
consistent with prudent risk through a fully managed investment policy
utilizing equity securities, primarily common stocks of
large-capitalization companies, as well as investment grade
intermediate-and long-term debt securities and money market securities.
Natural Resources Portfolio. Long-term growth of capital and
protection of the purchasing power of shareholders' capital by investing
primarily in equity securities of domestic and foreign companies with
substantial natural resource assets.
Global Strategy Portfolio. High total investment return by investing
primarily in a portfolio of equity and fixed income securities of U.S. and
foreign issuers.
Balanced Portfolio. A level of current income and a degree of
stability of principal not normally available from an investment solely in
equity securities and the opportunity for capital appreciation greater than
that normally available from an investment solely in debt securities by
investing in a balanced portfolio of fixed income and equity securities.
There can be no assurance that the objectives of any Portfolio will be realized.
See "Investment Objectives and Policies of the Portfolios," page 13. THE MONEY
RESERVE PORTFOLIO ATTEMPTS TO MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER
SHARE, BUT THERE CAN BE NO ASSURANCE THAT IT WILL BE ABLE TO DO SO. AN
INVESTMENT IN THE MONEY RESERVE PORTFOLIO IS NEITHER INSURED NOR GUARANTEED BY
THE U.S. GOVERNMENT. THE HIGH YIELD PORTFOLIO INVESTS IN HIGH YIELD BONDS
(COMMONLY KNOWN AS "JUNK BONDS"), WHICH INVOLVE SPECIAL RISKS. SEE "INVESTMENT
OBJECTIVES AND POLICIES OF THE PORTFOLIOS--HIGH YIELD PORTFOLIO-- RISK FACTORS."
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
------------------------
MERRILL LYNCH ASSET MANAGEMENT--INVESTMENT ADVISER
MERRILL LYNCH FUNDS DISTRIBUTOR, INC.--DISTRIBUTOR
------------------------
This Prospectus sets forth in concise form the information about the Fund that a
prospective investor should know before investing in the Fund. Investors should
read and retain this Prospectus for future reference. A statement containing
additional information about the Fund has been filed with the Securities and
Exchange Commission in a Statement of Additional Information, dated April 29,
1994, and is available upon request and without charge, by calling or writing
the Fund at the address and telephone number set forth above. The Statement of
Additional Information is hereby incorporated by reference into this Prospectus.
------------------------
<PAGE>
MERRILL LYNCH SERIES FUND, INC.
------------------------
PROSPECTUS
------------------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS, OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, IN CONNECTION
WITH THE OFFER CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH OTHER
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE FUND, THE INVESTMENT ADVISER, OR THE DISTRIBUTOR. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFERING IN ANY STATE IN WHICH SUCH OFFERING MAY NOT LAWFULLY
BE MADE.
------------------------
<TABLE> <CAPTION>
TABLE OF CONTENTS
PAGE
-----------
<S> <C>
Financial Highlights....................................................................................... 3
The Insurance Companies.................................................................................... 13
Money Reserve Portfolio Yield Information.................................................................. 13
Investment Objectives and Policies of the Portfolios....................................................... 13
Directors.................................................................................................. 27
Investment Adviser......................................................................................... 28
Portfolio Transactions and Brokerage....................................................................... 30
Purchase of Shares......................................................................................... 30
Redemption of Shares....................................................................................... 30
Dividends, Distributions and Taxes......................................................................... 30
Performance Data........................................................................................... 31
Additional Information..................................................................................... 32
Appendix A: Money Market Securities........................................................................ 34
Appendix B: Description of Corporate Bond Ratings.......................................................... 36
</TABLE>
2
<PAGE>
FINANCIAL HIGHLIGHTS
The financial information in the table below has been audited in
conjunction with the annual audit of the financial statements of the Fund by
Deloitte & Touche, Independent Auditors. Financial statements for the year ended
December 31, 1993 and the Independent Auditors' report thereon are included in
the Statement of Additional Information.
<TABLE> <CAPTION>
The following per share data and ratios have
been derived from information provided in
the financial statements:
BALANCED PORTFOLIO
--------------------------------------------------------------------
FOR THE YEAR ENDED DECEMBER 31,
-----------------------------------------------------
PERIOD
MAY 2,
1988* TO
DECEMBER 31,
1993 1992 1991 1990 1989 1988
--------- --------- --------- --------- --------- -------------
<S> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSET VALUE:
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period......................... $ 13.70 $ 13.29 $ 11.78 $ 12.25 $ 10.59 $ 10.00
--------- --------- --------- --------- --------- -------------
Investment income--net....................................... .50 .47 .60 .64 .48 .26
Realized and unrealized gain (loss) on investments and on
foreign currency transactions--net(1)........................ 1.35 .38 1.77 (.47) 1.66 .33
--------- --------- --------- --------- --------- -------------
Total from investment operations............................. 1.85 .85 2.37 .17 2.14 .59
--------- --------- --------- --------- --------- -------------
Less dividends and distributions:
Investment income--net..................................... (.75) (.26) (.68) (.56) (.48) --
Realized gain on investments--net.......................... (.18) (.18) (.18) (.08) -- --
--------- --------- --------- --------- --------- -------------
Total dividends and distributions............................ (.93) (.44) (.86) (.64) (.48) --
--------- --------- --------- --------- --------- -------------
Net asset value, end of period............................... $ 14.62 $ 13.70 $ 13.29 $ 11.78 $ 12.25 $ 10.59
--------- --------- --------- --------- --------- -------------
--------- --------- --------- --------- --------- -------------
TOTAL INVESTMENT RETURN:**
Based on net asset value per share........................... 14.31% 6.67% 20.95% 1.57% 20.75% 5.90%
--------- --------- --------- --------- --------- -------------
--------- --------- --------- --------- --------- -------------
RATIOS TO AVERAGE NET ASSETS:
Expenses, net of reimbursement............................... .43% .48% .50% .50% .50% .50%***
--------- --------- --------- --------- --------- -------------
--------- --------- --------- --------- --------- -------------
Expenses..................................................... .43% .48% .50% .50% .66% .70%***
--------- --------- --------- --------- --------- -------------
--------- --------- --------- --------- --------- -------------
Investment income--net....................................... 3.72% 4.40% 4.91% 5.56% 5.58% 5.62%***
--------- --------- --------- --------- --------- -------------
--------- --------- --------- --------- --------- -------------
SUPPLEMENTAL DATA:
Net assets, end of period (in thousands)..................... $ 88,018 $ 56,080 $ 38,128 $ 29,065 $ 27,936 $ 5,530
--------- --------- --------- --------- --------- -------------
--------- --------- --------- --------- --------- -------------
Portfolio turnover........................................... 25.38% 33.15% 58.77% 26.84% 48.43% 42.49%
--------- --------- --------- --------- --------- -------------
--------- --------- --------- --------- --------- -------------
</TABLE>
- ------------
<TABLE>
<S> <C>
* Commencement of operations.
** Total investment returns exclude the effects of sales loads.
*** Annualized.
(1) Foreign currency transactions have been reclassified to conform to the 1993 presentation.
</TABLE>
Further information about the Fund's performance is contained in the Fund's
Annual Report, which can be obtained, without charge, upon request.
3
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE> <CAPTION>
The following per share data and ratios have
been derived from information provided in
the financial statements:
CAPITAL STOCK PORTFOLIO
--------------------------------------------------------------------------------------
FOR THE YEAR ENDED DECEMBER 31,
--------------------------------------------------------------------------------------
1993 1992 1991 1990 1989 1988 1987 1986
--------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN
NET ASSET VALUE:
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of
period............................. $ 23.22 $ 23.39 $ 19.65 $ 20.19 $ 16.07 $ 16.27 $ 18.18 $ 15.49
--------- --------- --------- --------- --------- --------- --------- ---------
Investment income--net............. .33 .39 .45 .54 .61 .55 .55 .55
Realized and unrealized gain (loss)
on investments and foreign
currency transactions--net(1)..... 3.41 .16 4.97 (.44) 4.16 1.43 (.79) 2.77
--------- --------- --------- --------- --------- --------- --------- ---------
Total from investment operations... 3.74 .55 5.42 .10 4.77 1.98 (.24) 3.32
--------- --------- --------- --------- --------- --------- --------- ---------
Less dividends and distributions:
Investment income--net............ (.59) (.20) (.54) (.52) (.65) (.58) (.48) (.54)
Realized gain on
investments--net................... (.64) (.52) (1.14) (.12) -- (1.60) (1.19) (.09)
--------- --------- --------- --------- --------- --------- --------- ---------
Total dividends and
distributions...................... (1.23) (.72) (1.68) (.64) (.65) (2.18) (1.67) (.63)
--------- --------- --------- --------- --------- --------- --------- ---------
Net asset value, end of period..... $ 25.73 $ 23.22 $ 23.39 $ 19.65 $ 20.19 $ 16.07 $ 16.27 $ 18.18
--------- --------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- --------- ---------
TOTAL INVESTMENT RETURN*
Based on net asset value per
share.............................. 17.01% 2.47% 29.05% 0.61% 30.20% 13.31% (2.65)% 21.93%
--------- --------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- --------- ---------
RATIOS TO AVERAGE NET ASSETS:
Expenses, net of reimbursement..... .38% .41% .40% .40% .41% .40% .38% .46%
--------- --------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- --------- ---------
Expenses........................... .38% .41% .40% .40% .41% .40% .38% .46%
--------- --------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- --------- ---------
Investment income--net............. 1.43% 1.89% 2.27% 2.66% 3.45% 3.31% 3.16% 3.37%
--------- --------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- --------- ---------
SUPPLEMENTAL DATA:
Net assets, end of period (in
thousands)......................... $ 223,971 $ 202,417 $ 177,604 $ 128,511 $ 137,705 $ 99,203 $ 118,984 $ 94,257
--------- --------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- --------- ---------
Portfolio Turnover................. 100.12% 74.89% 63.90% 61.76% 55.41% 32.85% 47.39% 52.65%
--------- --------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- --------- ---------
The following per share data and ratios have
been derived from information provided in
the financial statements:
1985 1984
--------- ---------
INCREASE (DECREASE) IN
NET ASSET VALUE:
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of
period............................. $ 13.86 $ 12.67
--------- ---------
Investment income--net............. .45 .46
Realized and unrealized gain (loss)
on investments and foreign
currency transactions--net(1)..... 2.58 1.12
--------- ---------
Total from investment operations... 3.03 1.58
--------- ---------
Less dividends and distributions:
Investment income--net............ (.47) (.35)
Realized gain on
investments--net................... (.93) (.04)
--------- ---------
Total dividends and
distributions...................... (1.40) (.39)
--------- ---------
Net asset value, end of period..... $ 15.49 $ 13.86
--------- ---------
--------- ---------
TOTAL INVESTMENT RETURN*
Based on net asset value per
share.............................. 23.32% 12.85%
--------- ---------
--------- ---------
RATIOS TO AVERAGE NET ASSETS:
Expenses, net of reimbursement..... .60% .81%
--------- ---------
--------- ---------
Expenses........................... .49% .50%
--------- ---------
--------- ---------
Investment income--net............. 4.30% 4.55%
--------- ---------
--------- ---------
SUPPLEMENTAL DATA:
Net assets, end of period (in
thousands)......................... $ 63,929 $ 20,309
--------- ---------
--------- ---------
Portfolio Turnover................. 33.97% 70.95%
--------- ---------
--------- ---------
</TABLE>
- ------------
* Total investment returns exclude the effects of sales loads.
(1) Foreign currency transactions have been reclassified to conform to the 1993
presentation.
4
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE> <CAPTION>
The following per share data and ratios have
been derived from information provided in
the financial statements:
GLOBAL STRATEGY PORTFOLIO
----------------------------------------------------------------
FOR THE YEAR ENDED DECEMBER 31,
----------------------------------------------------------------
1993 1992 1991 1990 1989 1988
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSET VALUE:
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period................... $ 13.23 $ 13.16 $ 12.00 $ 11.68 $ 10.41 $ 9.55
--------- --------- --------- --------- --------- ---------
Investment income--net................................. .36 .39 .41 .82 .38 .52
Realized and unrealized gain (loss) on investments and
foreign currency transactions--net(1)................. 2.61 (.01) 1.60 (.14) 1.41 .65
--------- --------- --------- --------- --------- ---------
Total from investment operations....................... 2.97 .38 2.01 .68 1.79 1.17
--------- --------- --------- --------- --------- ---------
Less dividends and distributions:
Investment income--net................................ (.60) (.17) (.85) (.36) (.52) (.31)
Realized gain on investments--net..................... (.18) (.14) -- -- -- --
--------- --------- --------- --------- --------- ---------
Total dividends and distributions...................... (.78) (.31) (.85) (.36) (.52) (.31)
--------- --------- --------- --------- --------- ---------
Net asset value, end of period......................... $ 15.42 $ 13.23 $ 13.16 $ 12.00 $ 11.68 $ 10.41
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
TOTAL INVESTMENT RETURN:**
Based on net asset value per share..................... 23.73% 3.00% 17.50% 6.01% 17.76% 12.50%
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
RATIOS TO AVERAGE NET ASSETS:
Expenses, net of reimbursement......................... .45% .50% .50% .50% .50% .50%
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
Expenses............................................... .46% .54% .60% .61% .75% .61%
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
Investment income--net................................. 3.27% 3.84% 3.86% 8.03% 4.07% 4.90%
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
SUPPLEMENTAL DATA:
Net assets, end of period (in thousands)............... $ 182,672 $ 52,599 $ 29,893 $ 22,087 $ 13,215 $ 9,176
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
Portfolio turnover..................................... 30.53% 43.56% 93.85% 104.19% 80.25% 131.22%
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
<CAPTION>
The following per share data and ratios have
been derived from information provided in
the financial statements:
PERIOD JULY
1, 1987* TO
DECEMBER 31,
1987
-------------
INCREASE (DECREASE) IN NET ASSET VALUE:
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period................... $ 10.00
-------------
Investment income--net................................. .12
Realized and unrealized gain (loss) on investments and
foreign currency transactions--net(1)................. (.57)
-------------
Total from investment operations....................... (.45)
-------------
Less dividends and distributions:
Investment income--net................................ --
Realized gain on investments--net..................... --
-------------
Total dividends and distributions...................... --
-------------
Net asset value, end of period......................... $ 9.55
-------------
-------------
TOTAL INVESTMENT RETURN:**
Based on net asset value per share..................... (4.50)%
-------------
-------------
RATIOS TO AVERAGE NET ASSETS:
Expenses, net of reimbursement......................... .50%***
-------------
-------------
Expenses............................................... .81%***
-------------
-------------
Investment income--net................................. 3.80%***
-------------
-------------
SUPPLEMENTAL DATA:
Net assets, end of period (in thousands)............... $ 10,596
-------------
-------------
Portfolio turnover..................................... 24.81%
-------------
-------------
</TABLE>
- ------------
* Commencement of operations.
** Total investment returns exclude the effects of sales loads.
*** Annualized.
(1) Foreign currency transactions have been reclassified to conform to the 1993
presentation.
5
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE> <CAPTION>
The following per share data and ratios have
been derived from information provided in
the financial statements:
GROWTH STOCK PORTFOLIO
--------------------------------------------------------------------------------------
FOR THE YEAR ENDED DECEMBER 31,
--------------------------------------------------------------------------------------
1993 1992 1991 1990 1989 1988 1987 1986
--------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSET
VALUE:
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of
period............................. $ 23.98 $ 23.31 $ 16.28 $ 18.95 $ 15.57 $ 14.05 $ 16.19 $ 13.90
--------- --------- --------- --------- --------- --------- --------- ---------
Investment income--net............. .32 .26 .25 .29 .30 .19 .14 .21
Realized and unrealized gain (loss)
on investments and foreign
currency transactions--net(1)...... 1.63 .53 7.06 (2.63) 3.30 1.51 (1.10) 2.31
--------- --------- --------- --------- --------- --------- --------- ---------
Total from investment operations... 1.95 .79 7.31 (2.34) 3.60 1.70 (.96) 2.52
--------- --------- --------- --------- --------- --------- --------- ---------
Less dividends and distributions:
Investment income--net........... (.41) (.12) (.28) (.33) (.22) (.18) (.18) (.20)
Realized gain on
investments--net................... (.87) -- -- -- -- -- (1.00) (.03)
--------- --------- --------- --------- --------- --------- --------- ---------
Total dividends and
distributions...................... (1.28) (.12) (.28) (.33) (.22) (.18) (1.18) (.23)
--------- --------- --------- --------- --------- --------- --------- ---------
Net asset value, end of period..... $ 24.65 $ 23.98 $ 23.31 $ 16.28 $ 18.95 $ 15.57 $ 14.05 $ 16.19
--------- --------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- --------- ---------
TOTAL INVESTMENT RETURN:*
Based on net asset value per
share.............................. 8.63% 3.40% 45.31% (12.41)% 23.20% 12.13% (7.52)% 18.31%
--------- --------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- --------- ---------
RATIOS TO AVERAGE NET ASSETS:
Expenses, net of reimbursement..... .38% .42% .42% .43% .42% .40% .40% .47%
--------- --------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- --------- ---------
Expenses........................... .38% .42% .42% .43% .42% .40% .40% .47%
--------- --------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- --------- ---------
Investment income--net............. 1.35% 1.32% 1.56% 1.43% 1.69% 1.19% .92% 1.53%
--------- --------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- --------- ---------
SUPPLEMENTAL DATA:
Net assets, end of period (in
thousands)......................... $ 122,836 $ 139,062 $ 113,715 $ 52,086 $ 79,109 $ 64,549 $ 68,027 $ 46,017
--------- --------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- --------- ---------
Portfolio turnover................. 160.29% 87.25% 60.48% 94.54% 78.87% 82.05% 99.09% 69.38%
--------- --------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- --------- ---------
<CAPTION>
The following per share data and ratios have
been derived from information provided in
the financial statements:
1985 1984
--------- ---------
INCREASE (DECREASE) IN NET ASSET
VALUE:
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of
period............................. $ 10.96 $ 11.07
--------- ---------
Investment income--net............. .25 .33
Realized and unrealized gain (loss)
on investments and foreign
currency transactions--net(1)...... 3.07 (.05)
--------- ---------
Total from investment operations... 3.32 .28
--------- ---------
Less dividends and distributions:
Investment income--net........... (.32) (.26)
Realized gain on
investments--net................... (.06) (.13)
--------- ---------
Total dividends and
distributions...................... (.38) (.39)
--------- ---------
Net asset value, end of period..... $ 13.90 $ 10.96
--------- ---------
--------- ---------
TOTAL INVESTMENT RETURN:*
Based on net asset value per
share.............................. 30.87% 2.77%
--------- ---------
--------- ---------
RATIOS TO AVERAGE NET ASSETS:
Expenses, net of reimbursement..... .49% .50%
--------- ---------
--------- ---------
Expenses........................... .65% .82%
--------- ---------
--------- ---------
Investment income--net............. 2.51% 3.60%
--------- ---------
--------- ---------
SUPPLEMENTAL DATA:
Net assets, end of period (in
thousands)......................... $ 26,057 $ 11,899
--------- ---------
--------- ---------
Portfolio turnover................. 58.98% 91.30%
--------- ---------
--------- ---------
</TABLE>
- ------------
* Total investment returns exclude the effects of sales loads.
(1) Foreign currency transactions have been reclassified to conform to the 1993
presentation.
6
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE> <CAPTION>
The following per share data and ratios have
been derived from information provided in
the financial statements:
HIGH YIELD PORTFOLIO
------------------------------------------------------------------------------------------
FOR THE YEAR ENDED DECEMBER 31,
---------------------------------------------------------------------------
PERIOD
MAY 1,
1986* TO
DECEMBER 31,
1993 1992 1991 1990 1989 1988 1987 1986
--------- --------- --------- --------- --------- --------- --------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSET
VALUE:
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period.... $ 9.10 $ 8.44 $ 6.98 $ 8.92 $ 9.66 $ 9.40 $ 10.06 $ 10.00
--------- --------- --------- --------- --------- --------- --------- -------------
Investment income--net.................. .94 1.03 1.02 1.24 1.20 1.16 1.14 .73
Realized and unrealized gain (loss) on
investments and foreign currency
transactions--net(1).................... .62 .64 1.47 (1.94) (.73) .15 (.66) .06
--------- --------- --------- --------- --------- --------- --------- -------------
Total from investment operations........ 1.56 1.67 2.49 (.70) .47 1.31 .48 .79
--------- --------- --------- --------- --------- --------- --------- -------------
Less dividends:
Investment income--net................ (.98) (1.01) (1.03) (1.24) (1.21) (1.05) (1.14) (.73)
--------- --------- --------- --------- --------- --------- --------- -------------
Net asset value, end of period.......... $ 9.68 $ 9.10 $ 8.44 $ 6.98 $ 8.92 $ 9.66 $ 9.40 $ 10.06
--------- --------- --------- --------- --------- --------- --------- -------------
--------- --------- --------- --------- --------- --------- --------- -------------
TOTAL INVESTMENT RETURN:**
Based on net asset value per share...... 18.11% 20.63% 37.77% (8.83)% 5.08% 14.53% 4.68% 8.10%
--------- --------- --------- --------- --------- --------- --------- -------------
--------- --------- --------- --------- --------- --------- --------- -------------
RATIOS TO AVERAGE NET ASSETS:
Expenses, net of reimbursement.......... .43% .44% .46% .45% .44% .41% .42% .50%**
--------- --------- --------- --------- --------- --------- --------- -------------
--------- --------- --------- --------- --------- --------- --------- -------------
Expenses................................ .43% .44% .46% .45% .44% .41% .42% .50%**
--------- --------- --------- --------- --------- --------- --------- -------------
--------- --------- --------- --------- --------- --------- --------- -------------
Investment income--net.................. 10.17% 11.45% 12.74% 14.93% 12.64% 12.10% 11.45% 10.43%**
--------- --------- --------- --------- --------- --------- --------- -------------
--------- --------- --------- --------- --------- --------- --------- -------------
SUPPLEMENTAL DATA:
Net assets, end of period (in
thousands).............................. $ 94,739 $ 68,034 $ 51,072 $ 34,673 $ 58,910 $ 78,343 $ 54,173 $ 50,932
--------- --------- --------- --------- --------- --------- --------- -------------
--------- --------- --------- --------- --------- --------- --------- -------------
Portfolio turnover...................... 73.01% 83.95% 76.34% 31.01% 70.43% 38.95% 49.43% 17.39%
--------- --------- --------- --------- --------- --------- --------- -------------
--------- --------- --------- --------- --------- --------- --------- -------------
</TABLE>
- ------------
* Commencement of operations.
** Total investment returns exclude the effects of sales loads.
*** Annualized.
(1) Foreign currency transactions have been reclassified to conform to the 1993
presentation.
7
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE> <CAPTION>
The following per share data and ratios have
been derived from information provided in
the financial statements:
INTERMEDIATE GOVERNMENT BOND PORTFOLIO
--------------------------------------------------------------------------------------
FOR THE YEAR ENDED DECEMBER 31,
--------------------------------------------------------------------------------------
1993 1992 1991 1990 1989 1988 1987 1986
--------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSET
VALUE:
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of
period................................ $ 11.75 $ 11.79 $ 11.04 $ 11.02 $ 10.58 $ 10.78 $ 11.67 $ 11.22
--------- --------- --------- --------- --------- --------- --------- ---------
Investment income--net................ .83 .83 .86 .92 .92 .88 .87 .95
Realized and unrealized gain (loss) on
investments and foreign currency
transactions--net (1)................. .50 (.04) .76 .01 .44 (.27) (.72) .53
--------- --------- --------- --------- --------- --------- --------- ---------
Total from investment operations...... 1.33 .79 1.62 .93 1.36 .61 .15 1.48
--------- --------- --------- --------- --------- --------- --------- ---------
Less dividends and distributions:
Investment income--net............... (.84) (.83) (.87) (.91) (.92) (.81) (.87) (.95)
Realized gain on investments--net.... (.22) -- -- -- -- -- (.17) (.08)
--------- --------- --------- --------- --------- --------- --------- ---------
Total dividends and distributions..... (1.06) (.83) (.87) (.91) (.92) (.81) (1.04) (1.03)
--------- --------- --------- --------- --------- --------- --------- ---------
Net asset value, end of period........ $ 12.02 $ 11.75 $ 11.79 $ 11.04 $ 11.02 $ 10.58 $ 10.78 $ 11.67
--------- --------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- --------- ---------
TOTAL INVESTMENT RETURN:*
Based on net asset value per share.... 11.20% 7.03% 15.57% 8.98% 13.46% 5.76% 1.50% 13.81%
--------- --------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- --------- ---------
RATIOS TO AVERAGE NET ASSETS:
Expenses.............................. .36% .40% .39% .40% .41% .40% .39% .47%
--------- --------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- --------- ---------
Investment income--net................ 6.42% 7.03% 7.82% 8.50% 8.53% 8.21% 7.89% 8.10%
--------- --------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- --------- ---------
SUPPLEMENTAL DATA:
Net assets, end of period (in
thousands)............................ $ 284,495 $ 269,254 $ 261,434 $ 231,672 $ 224,531 $ 194,568 $ 145,525 $ 166,949
--------- --------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- --------- ---------
Portfolio turnover.................... 113.61% 80.54% 138.41% 129.98% 227.15% 258.98% 256.36% 103.48%
--------- --------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- --------- ---------
<CAPTION>
The following per share data and ratios have
been derived from information provided in
the financial statements:
1985 1984
--------- ---------
INCREASE (DECREASE) IN NET ASSET
VALUE:
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of
period................................ $ 10.48 $ 10.33
--------- ---------
Investment income--net................ 1.10 1.12
Realized and unrealized gain (loss) on
investments and foreign currency
transactions--net (1)................. .74 .15
--------- ---------
Total from investment operations...... 1.84 1.27
--------- ---------
Less dividends and distributions:
Investment income--net............... (1.10) (1.12)
Realized gain on investments--net.... -- --
--------- ---------
Total dividends and distributions..... (1.10) (1.12)
--------- ---------
Net asset value, end of period........ $ 11.22 $ 10.48
--------- ---------
--------- ---------
TOTAL INVESTMENT RETURN:*
Based on net asset value per share.... 18.55% 13.29%
--------- ---------
--------- ---------
RATIOS TO AVERAGE NET ASSETS:
Expenses.............................. .49% .50%
--------- ---------
--------- ---------
Investment income--net................ 9.92% 11.04%
--------- ---------
--------- ---------
SUPPLEMENTAL DATA:
Net assets, end of period (in
thousands)............................ $ 61,058 $ 19,478
--------- ---------
--------- ---------
Portfolio turnover.................... 89.40% 18.55%
--------- ---------
--------- ---------
</TABLE>
- ------------
* Total investment returns exclude the effects of sales loads.
(1) Foreign currency transactions have been reclassified to conform to the 1993
presentation.
8
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE> <CAPTION>
The following per share data and ratios have
been derived from information provided in
the financial statements:
LONG TERM CORPORATE BOND PORTFOLIO
-------------------------------------------------------------------------------------------------
FOR THE YEAR ENDED DECEMBER 31,
-------------------------------------------------------------------------------------------------
1993 1992 1991 1990 1989 1988 1987 1986 1985
--------- --------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN
NET ASSET VALUE:
PER SHARE OPERATING
PERFORMANCE:
Net asset value,
beginning of period.... $ 12.07 $ 12.06 $ 11.21 $ 11.36 $ 10.91 $ 10.93 $ 12.27 $ 11.66 $ 10.64
--------- --------- --------- --------- --------- --------- --------- --------- ---------
Investment
income--net............. .83 .90 .96 .98 1.00 .97 .99 1.09 1.21
Realized and unrealized
gain (loss) on
investments and foreign
currency
transactions--net (1)... .68 .02 .85 (.15) .45 (.10) (1.00) .66 1.02
--------- --------- --------- --------- --------- --------- --------- --------- ---------
Total from investment
operations.............. 1.51 .92 1.81 .83 1.45 .87 (.01) 1.75 2.23
--------- --------- --------- --------- --------- --------- --------- --------- ---------
Less dividends and
distributions:
Investment
income--net............. (.83) (.91) (.96) (.98) (1.00) (.89) (.99) (1.09) (1.21)
Realized gain on
investments--net........ (.16) -- -- -- -- -- (.34) (.05) --
--------- --------- --------- --------- --------- --------- --------- --------- ---------
Total dividends and
distributions........... (.99) (.91) (.96) (.98) (1.00) (.89) (1.33) (1.14) (1.21)
--------- --------- --------- --------- --------- --------- --------- --------- ---------
Net asset value, end of
period.................. $ 12.59 $ 12.07 $ 12.06 $ 11.21 $ 11.36 $ 10.91 $ 10.93 $ 12.27 $ 11.66
--------- --------- --------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- --------- --------- ---------
TOTAL INVESTMENT
RETURN:*
Based on net asset value
per share.............. 13.01% 8.05% 17.01% 7.83% 13.96% 8.20% 0.00% 15.58% 22.20%
--------- --------- --------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- --------- --------- ---------
RATIOS TO AVERAGE NET
ASSETS:
Expenses................ .38% .43% .42% .43% .44% .42% .43% .48% .49%
--------- --------- --------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- --------- --------- ---------
Investment
income--net............. 6.65% 7.51% 8.35% 8.81% 9.01% 8.88% 9.53% 8.87% 10.72%
--------- --------- --------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- --------- --------- ---------
SUPPLEMENTAL DATA:
Net assets, end of
period (in
thousands).............. $ 139,321 $ 126,864 $ 128,396 $ 119,237 $ 126,655 $ 110,353 $ 76,564 $ 115,570 $ 57,120
--------- --------- --------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- --------- --------- ---------
Portfolio turnover...... 110.53% 93.10% 124.58% 107.36% 138.89% 175.86% 115.68% 121.03% 95.39%
--------- --------- --------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- --------- --------- ---------
<CAPTION>
The following per share data and ratios have
been derived from information provided in
the financial statements:
1984
---------
INCREASE (DECREASE) IN
NET ASSET VALUE:
PER SHARE OPERATING
PERFORMANCE:
Net asset value,
beginning of period.... $ 10.47
---------
Investment
income--net............. 1.24
Realized and unrealized
gain (loss) on
investments and foreign
currency
transactions--net (1)... .17
---------
Total from investment
operations.............. 1.41
---------
Less dividends and
distributions:
Investment
income--net............. (1.24)
Realized gain on
investments--net........ --
---------
Total dividends and
distributions........... (1.24)
---------
Net asset value, end of
period.................. $ 10.64
---------
---------
TOTAL INVESTMENT
RETURN:*
Based on net asset value
per share.............. 14.79%
---------
---------
RATIOS TO AVERAGE NET
ASSETS:
Expenses................ .50%
---------
---------
Investment
income--net............. 12.14%
---------
---------
SUPPLEMENTAL DATA:
Net assets, end of
period (in
thousands).............. $ 20,022
---------
---------
Portfolio turnover...... 72.68%
---------
---------
</TABLE>
- ------------
* Total investment returns exclude the effects of sales loads.
(1) Foreign currency transactions have been reclassified to conform to the 1993
presentation.
9
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE> <CAPTION>
The following per share data and ratios have
been derived from information provided in
the financial statements:
MONEY RESERVE PORTFOLIO
-------------------------------------------------------------------------------------------------
FOR THE YEAR ENDED DECEMBER 31,
-------------------------------------------------------------------------------------------------
1993 1992 1991 1990 1989 1988 1987 1986 1985
--------- --------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN
NET ASSET VALUE:
PER SHARE OPERATING
PERFORMANCE:
Net asset value,
beginning of period... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
--------- --------- --------- --------- --------- --------- --------- --------- ---------
Investment
income--net............. .03 .04 .06 .08 .09 .07 .07 .05 .08
Realized and unrealized
gain (loss) on
investments and
foreign currency
transactions--
net(1).................. -- -- -- -- -- -- -- -- --
--------- --------- --------- --------- --------- --------- --------- --------- ---------
Total from investment
operations.............. .03 .04 .06 .08 .09 .07 .07 .05 .08
--------- --------- --------- --------- --------- --------- --------- --------- ---------
Less dividends:
Investment
income--net............. (.03) (.04) (.06) (.08) (.09) (.07) (.07) (.05) (.08)
--------- --------- --------- --------- --------- --------- --------- --------- ---------
Net asset value, end of
period.................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
--------- --------- --------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- --------- --------- ---------
TOTAL INVESTMENT
RETURN:*
Based on net asset value
per share............... 3.08% 3.77% 6.11% 8.26% 9.30% 7.48% 6.60% 6.70% 8.17%
--------- --------- --------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- --------- --------- ---------
RATIOS TO AVERAGE NET
ASSETS:
Expenses................ .36% .39% .38% .39% .38% .39% .38% .45% .49%
--------- --------- --------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- --------- --------- ---------
Investment
income--net**........... --% --% --% --% --% --% --% --% --%
--------- --------- --------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- --------- --------- ---------
Investment income--net
and realized gain
(loss) on
investments--net***..... 3.03% 3.77% 5.97% 7.92% 8.93% 7.26% 6.47% 6.46% 7.85%
--------- --------- --------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- --------- --------- ---------
SUPPLEMENTAL DATA:
Net assets, end of
period (in
thousands).............. $ 546,710 $ 647,190 $ 798,020 $ 935,463 $ 816,661 $ 806,119 $ 674,890 $ 471,367 $ 363,739
--------- --------- --------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- --------- --------- ---------
Portfolio turnover**.... --% --% --% --% --% --% --% --% --%
--------- --------- --------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- --------- --------- ---------
<CAPTION>
The following per share data and ratios have
been derived from information provided in
the financial statements:
1984
---------
INCREASE (DECREASE) IN
NET ASSET VALUE:
PER SHARE OPERATING
PERFORMANCE:
Net asset value,
beginning of period... $ 1.00
---------
Investment
income--net............. .10
Realized and unrealized
gain (loss) on
investments and
foreign currency
transactions--
net(1).................. --
---------
Total from investment
operations.............. .10
---------
Less dividends:
Investment
income--net............. (.10)
---------
Net asset value, end of
period.................. $ 1.00
---------
---------
TOTAL INVESTMENT
RETURN:*
Based on net asset value
per share............... 10.61%
---------
---------
RATIOS TO AVERAGE NET
ASSETS:
Expenses................ .50%
---------
---------
Investment
income--net**........... --%
---------
---------
Investment income--net
and realized gain
(loss) on
investments--net***..... 10.30%
---------
---------
SUPPLEMENTAL DATA:
Net assets, end of
period (in
thousands).............. $ 218,755
---------
---------
Portfolio turnover**.... --%
---------
---------
</TABLE>
- ------------
* Total investment returns exclude the effects of sales loads.
** Not applicable to the Money Reserve Portfolio.
*** Applicable only to the Money Reserve Portfolio.
(1) Foreign currency transactions have been reclassified to conform to the 1993
presentation.
10
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE> <CAPTION>
The following per share data and ratios have
been derived from information provided in
the financial statements:
MULTIPLE STRATEGY PORTFOLIO
------------------------------------------------------------------------------------------------------------
FOR THE YEAR ENDED DECEMBER 31,
------------------------------------------------------------------------------------------------------------
PERIOD
MAY 2,
1985* TO
DECEMBER 31,
1993 1992 1991 1990 1989 1988 1987 1986 1985
---------- ---------- ---------- ---------- ---------- ---------- ---------- --------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE)
IN NET ASSET VALUE:
PER SHARE OPERATING
PERFORMANCE:
Net asset value,
beginning of period.. $ 18.70 $ 18.32 $ 15.45 $ 15.56 $ 13.64 $ 13.01 $ 13.49 $ 11.38 $ 10.00
---------- ---------- ---------- ---------- ---------- ---------- ---------- --------- -------------
Investment income--
net.................. .54 .61 .72 .99 .79 .77 .50 .26 .14
Realized and
unrealized gain
(loss) on
investments and
foreign currency
transactions--net(1).... 2.30 .17 3.13 (.27) 2.02 .67 (.50) 2.06 1.27
---------- ---------- ---------- ---------- ---------- ---------- ---------- --------- -------------
Total from investment
operations........... 2.84 .78 3.85 .72 2.81 1.44 -- 2.32 1.41
---------- ---------- ---------- ---------- ---------- ---------- ---------- --------- -------------
Less dividends and
distributions:
Investment
income--net.......... (.88) (.32) (.98) (.83) (.89) (.61) (.38) (.20) (.03)
Realized gain on
investments--net..... (.82) (.08) -- -- -- (.20) (.10) (.01) --
---------- ---------- ---------- ---------- ---------- ---------- ---------- --------- -------------
Total dividends and
distributions........ (1.70) (.40) (.98) (.83) (.89) (.81) (.48) (.21) (.03)
---------- ---------- ---------- ---------- ---------- ---------- ---------- --------- -------------
Net asset value, end
of period.......... $ 19.84 $ 18.70 $ 18.32 $ 15.45 $ 15.56 $ 13.64 $ 13.01 $ 13.49 $ 11.38
---------- ---------- ---------- ---------- ---------- ---------- ---------- --------- -------------
---------- ---------- ---------- ---------- ---------- ---------- ---------- --------- -------------
TOTAL INVESTMENT
RETURN**
Based on net asset
value per share...... 16.66% 4.35% 25.97% 4.91% 21.31% 11.49% (0.41)% 20.60% 14.13%
---------- ---------- ---------- ---------- ---------- ---------- ---------- --------- -------------
---------- ---------- ---------- ---------- ---------- ---------- ---------- --------- -------------
RATIOS TO AVERAGE NET
ASSETS:
Expenses, net of
reimbursement........ .36% .40% .39% .41% .39% .40% .38% .45% .65%***
---------- ---------- ---------- ---------- ---------- ---------- ---------- --------- -------------
---------- ---------- ---------- ---------- ---------- ---------- ---------- --------- -------------
Expenses............. .36% .40% .39% .41% .39% .40% .38% .45% .50%***
---------- ---------- ---------- ---------- ---------- ---------- ---------- --------- -------------
---------- ---------- ---------- ---------- ---------- ---------- ---------- --------- -------------
Investment income--
net.................. 2.91% 3.26% 4.17% 6.07% 5.15% 5.23% 4.11% 4.64% 5.92%***
---------- ---------- ---------- ---------- ---------- ---------- ---------- --------- -------------
---------- ---------- ---------- ---------- ---------- ---------- ---------- --------- -------------
SUPPLEMENTAL DATA:
Net assets, end of
period (in
thousands)........... $1,237,336 $1,137,022 $1,152,395 $1,018,054 $1,163,578 $1,190,469 $1,557,629 $ 850,609 $ 37,213
---------- ---------- ---------- ---------- ---------- ---------- ---------- --------- -------------
---------- ---------- ---------- ---------- ---------- ---------- ---------- --------- -------------
Portfolio turnover... 91.08% 67.71% 95.48% 106.39% 142.47% 147.43% 123.02% 83.17% 14.69%
---------- ---------- ---------- ---------- ---------- ---------- ---------- --------- -------------
---------- ---------- ---------- ---------- ---------- ---------- ---------- --------- -------------
</TABLE>
- ------------
* Commencement of operations.
** Total investment returns exclude the effects of sales loads.
*** Annualized.
(1) Foreign currency transactions have been reclassified to conform to the 1993
presentation.
11
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE> <CAPTION>
The following per share data and ratios have
been derived from information provided in
the financial statements:
NATURAL RESOURCES PORTFOLIO
----------------------------------------------------------------
FOR THE YEAR ENDED DECEMBER 31,
----------------------------------------------------------------
1993 1992 1991 1990 1989 1988
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSET VALUE:
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period................ $ 7.01 $ 7.04 $ 7.18 $ 7.84 $ 6.43 $ 7.46
--------- --------- --------- --------- --------- ---------
Investment income--net.............................. .13 .21 .27 .21 .19 .17
Realized and unrealized gain (loss) on investments
and foreign currency transactions--net(1)......... .66 (.12) (.14) (.69) 1.41 (1.06)
--------- --------- --------- --------- --------- ---------
Total from investment operations.................... .79 .09 .13 (.48) 1.60 (.89)
--------- --------- --------- --------- --------- ---------
Less dividends and distributions:
Investment income--net............................ (.27) (.12) (.27) (.18) (.19) (.14)
Realized gain on investments--net................. -- -- -- -- -- --
--------- --------- --------- --------- --------- ---------
Total dividends and distributions................... (.27) (.12) (.27) (.18) (.19) (.14)
--------- --------- --------- --------- --------- ---------
Net asset value, end of period...................... $ 7.53 $ 7.01 $ 7.04 $ 7.18 $ 7.84 $ 6.43
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
TOTAL INVESTMENT RETURN:**
Based on net asset value per share.................. 11.65% 1.35% 1.67% (6.18)% 25.23% (12.17)%
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
RATIOS TO AVERAGE NET ASSETS:
Expenses, net of reimbursement...................... .50% .50% .50% .50% .50% .48%
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
Expenses............................................ .59% .82% .74% .63% .64% .48%
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
Investment income--net.............................. 2.00% 2.84% 3.12% 2.76% 2.81% 2.22%
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
SUPPLEMENTAL DATA:
Net assets, end of period (in thousands)............ $ 18,437 $ 7,987 $ 8,030 $ 11,256 $ 13,405 $ 10,007
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
Portfolio turnover.................................. 65.26% 32.14% 30.20% 56.60% 113.38% 45.95%
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
<CAPTION>
The following per share data and ratios have
been derived from information provided in
the financial statements:
PERIOD JULY
1, 1987* TO
DECEMBER 31,
1987
-------------
INCREASE (DECREASE) IN NET ASSET VALUE:
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period................ $ 10.00
-------------
Investment income--net.............................. .06
Realized and unrealized gain (loss) on investments
and foreign currency transactions--net(1)......... (2.60)
-------------
Total from investment operations.................... (2.54)
-------------
Less dividends and distributions:
Investment income--net............................ --
Realized gain on investments--net................. --
-------------
Total dividends and distributions................... --
-------------
Net asset value, end of period...................... $ 7.46
-------------
-------------
TOTAL INVESTMENT RETURN:**
Based on net asset value per share.................. (25.40 )%
-------------
-------------
RATIOS TO AVERAGE NET ASSETS:
Expenses, net of reimbursement...................... .50%***
-------------
-------------
Expenses............................................ .69%***
-------------
-------------
Investment income--net.............................. 2.03%***
-------------
-------------
SUPPLEMENTAL DATA:
Net assets, end of period (in thousands)............ $ 20,476
-------------
-------------
Portfolio turnover.................................. 23.46%
-------------
-------------
</TABLE>
- ------------
* Commencement of operations.
** Total investment returns exclude the effects of sales loads.
*** Annualized.
(1) Foreign currency transactions have been reclassified to conform to the 1993
presentation.
12
<PAGE>
THE INSURANCE COMPANIES
Shares of the Fund are sold only to the Separate Accounts of the Merrill
Lynch Insurance Companies and Variable Account A of Monarch as the investment
base for variable life insurance policies issued by the Merrill Lynch Insurance
Companies and Monarch. Accordingly, the interest of a Policyowner in the shares
is subject to the terms of the Policy and is described in the accompanying
Prospectus for the Policies, which should be reviewed carefully by a person
considering the purchase of a Policy. That Prospectus describes the relationship
between increases or decreases in the net asset value of the Fund's shares and
any distributions in such shares, and the benefits provided under a Policy. The
rights of the Separate Accounts of the Merrill Lynch Insurance Companies and of
Variable Account A of Monarch as shareholders should be distinguished from the
rights of a Policyowner which are described in the Policies. Reference to
"shareholder" or "shareholders" in this Prospectus shall refer to the Separate
Accounts of the Merrill Lynch Insurance Companies and to Variable Account A of
Monarch.
It is possible that differences might arise among the Separate Accounts and
Variable Account A and that such differences could be considered material
conflicts. Such a material conflict could arise due to changes in the law (such
as state insurance law or federal tax law) which affect the various Separate
Accounts and Variable Account. It could also arise by reason of difference in
voting instructions from Policyowners of one or more of the Merrill Lynch
Insurance Companies or Monarch, or for other reasons. The various insurance
companies will monitor events to identify such conflicts and to determine how to
respond to such conflicts. If such a conflict occurs, an insurance company may
be required to eliminate one or more divisions of its Separate Account or
Variable Account which invests in the Fund or substitute a new portfolio for a
portfolio in which a division invests.
MONEY RESERVE
PORTFOLIO YIELD INFORMATION
Set forth below is yield information for the Money Reserve Portfolio for
the seven-day period ended December 31, 1993, computed to exclude realized and
unrealized gains and losses, and information as to the compounded annualized
yield, excluding gains and losses, for the same period. The yield quotations may
be of limited use for comparative purposes because they do not reflect charges
imposed at the Account level which, if included, would decrease the yield.
7-day Annualized Yield:
Excluding gains and losses.......... 3.08%
Compounded Annualized Yield........... 3.13%
Average maturity of portfolio at
end of period....................... 75 days
INVESTMENT OBJECTIVES AND
POLICIES OF THE PORTFOLIOS
INVESTMENT OBJECTIVES
Each Portfolio of the Fund has a different investment objective which it
pursues through separate investment policies as described below. The differences
in objectives and policies among the Portfolios can be expected to affect the
return of each Portfolio and the degree of market and financial risk to which
each Portfolio is subject. Each Portfolio is classified as "diversified," as
defined in the Investment Company Act of 1940, as amended, except that the
Natural Resources Portfolio and Global Strategy Portfolio are classified as
"non-diversified." The classification and the investment objectives of each
Portfolio discussed below may not be changed without the approval of the holders
of a majority of the outstanding shares of each Portfolio affected. Each of the
Portfolios may engage in certain of the portfolio strategies described in "Other
Portfolio Strategies" on page 19.
No Portfolio other than the High Yield Portfolio invests in fixed-income
securities which are rated below investment grade (i.e., securities rated Ba or
below by Moody's Investors Service, Inc. ("Moody's") or BB or below by Standard
& Poor's Corporation ("Standard & Poor's")). However, securities purchased by a
Portfolio may subsequently be downgraded. Such securities may continue to be
held and will be sold only if, in the judgment of the Investment Adviser, it is
advantageous to do so. Securities in the lowest category of investment grade
debt securities may have speculative characteristics which may lead to weakened
capacity to pay interest and principal during periods of adverse economic
conditions.
MONEY RESERVE PORTFOLIO
The investment objectives of the Money Reserve Portfolio are to preserve
shareholder capital, to maintain liquidity and to achieve the highest possible
current income consistent with the foregoing objectives by investing in
short-term money market securities. The Portfolio will invest in short-term U.S.
Government securities, government agency securities, bank certificates of
deposit, including variable rate certificates of
13
<PAGE>
deposit, and bankers' acceptances, short-term corporate debt securities (such as
commercial paper), variable amount master demand notes and repurchase and
reverse repurchase agreements. The types of money market securities in which the
Money Reserve Portfolio may invest are described more fully in Appendix A
hereto.
The Money Reserve Portfolio may not invest in any security which is not a
short-term money market security. For purposes of the investment policies of the
Money Reserve Portfolio, the Fund defines short-term money market securities as
securities having a maturity of no more than 762 days (25 months) in the case of
U.S. Government and agency securities and no more than 397 days (13 months) in
the case of all other securities. Management of the Fund expects that
substantially all the assets of the Money Reserve Portfolio will be invested in
securities maturing in less than one year, but at times some portion may have
maturities of up to 25 months. The dollar-weighted average maturity of the Money
Reserve Portfolio's assets will not exceed 90 days. During the year ended
December 31, 1993, the average maturity of the Money Reserve Portfolio's assets
ranged from 60 days to 90 days.
The Money Reserve Portfolio's investments in short-term corporate debt and
bank money instruments will be rated, or will be issued by issuers who have been
rated, in one of the two highest rating categories for short-term debt
obligations by a nationally recognized statistical rating organization (an
"NRSRO") or, if not rated, will be of comparable quality as determined by the
Directors of the Fund. The Money Reserve Portfolio's investments in corporate
bonds and debentures (which must have maturities at the date of purchase of 397
days (13 months) or less) will be in issuers who have received from an NRSRO a
rating, with respect to a class of short-term debt obligations that is
comparable in priority and security with the investment, in one of the two
highest rating categories for short-term obligations or, if not rated, will be
of comparable quality as determined by the Directors of the Fund. Currently,
there are five NRSROs: Duff & Phelps Inc., Fitch Investors Services, Inc., IBCA
Limited and its affiliate IBCA Inc., Moody's and Standard & Poor's.
A regulation of the Securities and Exchange Commission limits investments
by the Money Reserve Portfolio in securities issued by any one issuer (other
than the U.S. Government, its agencies or instrumentalities) ordinarily to not
more than 5% of its total assets, or in the event that such securities do not
have the highest rating, not more than 1% of its total assets. In addition, such
regulation requires that not more than 5% of the Money Reserve Portfolio's total
assets be invested in securities that have a rating lower than the highest
rating.
INTERMEDIATE GOVERNMENT BOND PORTFOLIO
The Intermediate Government Bond Portfolio may only invest in securities
issued or guaranteed by the U.S. Government and its agencies with a maximum
maturity not to exceed fifteen years. Depending on market conditions, an average
maturity of six to eight years is anticipated. U.S. Government and U.S.
Government agency securities are described in Appendix A. When, in the opinion
of management, prevailing market or economic conditions warrant, a portion of
the Intermediate Government Bond Portfolio may be invested in money market
securities or a liquid asset fund to effectively utilize cash reserves.
Certain of the securities in which the Intermediate Government Bond
Portfolio invests are supported by the full faith and credit of the U.S.
Government, such as U.S. Treasury obligations. Other of the securities in which
the Portfolio invests are not supported by the full faith and credit of the U.S.
Government but are issued by U.S. Government agencies or government sponsored
enterprises. Such securities are generally considered to have a low principal
risk. However, because of the longer term maturities of the securities in which
the Portfolio will invest, interest rate fluctuations may adversely affect the
market value of such securities. As interest rates rise, the value of fixed-
income securities will fall, adversely affecting the net asset value of the
Portfolio.
The U.S. Treasury Department has enacted regulations prescribing
diversification standards to be met by investment company portfolios to which
the investment base for any variable life insurance policy has been allocated as
a condition to such policies being treated as life insurance contracts under the
Internal Revenue Code of 1986, as amended (the "Code"). The regulations limit
the percentage of the total assets of any investment company portfolio which may
be invested in securities of any five or fewer issuers, including a requirement
that no more than 55% of a portfolio's total assets be invested in the
securities of any one issuer. Direct obligations of the U.S. Treasury, however,
are excepted from the diversification requirements. Each Government agency or
instrumentality issuing, guaranteeing or insuring securities shall be treated as
a separate issuer for purposes of the diversification standards.
14
<PAGE>
LONG-TERM CORPORATE BOND PORTFOLIO
The primary investment objective of the Long-Term Corporate Bond Portfolio
is to provide as high a level of current income as is believed to be consistent
with prudent investment risk. An additional objective is to seek preservation of
shareholders' capital. In seeking to achieve these objectives, the Portfolio
invests at least 80% of the value of its assets in straight debt securities
which have a rating within the three highest grades as determined by Standard &
Poor's (AAA, AA or A) or Moody's (Aaa, Aa or A).
From time to time, up to 20% of the Long-Term Corporate Bond Portfolio's
total assets may be invested in straight debt securities which are not rated
within the three highest grades of Standard & Poor's or Moody's as described
above, or in convertible debt securities, convertible preferred and preferred
stocks which have a rating within the three highest grades of Standard & Poor's
or Moody's applicable to such securities.
The Long-Term Corporate Bond Portfolio will not directly purchase common
stocks. However, it may retain up to 10% of the value of its total assets in
common stocks acquired either by conversion of fixed income securities or by the
exercise of warrants attached thereto.
When in the opinion of management prevailing market or economic conditions
warrant, a portion of the Long-Term Corporate Bond Portfolio may be invested in
money market securities or a liquid asset fund to effectively utilize cash
reserves.
The principal risk of the Portfolio should be minimized by the quality of
the bonds in which it will invest, but the long maturities that typically
provide the best yield will subject the Portfolio to possible substantial price
changes resulting from market yield fluctuations. The market price of
fixed-income securities such as those purchased by the Portfolio is affected by
changes in interest rates generally. As interest rates rise, the market value of
fixed-income securities will fall, adversely affecting the net asset value of
the Portfolio.
HIGH YIELD PORTFOLIO
The primary investment objective of the High Yield Portfolio is to obtain
as high a level of current income as is believed to be consistent with prudent
investment management. As a secondary objective, the High Yield Portfolio seeks
capital appreciation when consistent with its primary objective. The High Yield
Portfolio seeks to achieve its investment objectives by investing principally in
fixed-income securities, including corporate bonds and notes, convertible
securities and preferred stocks, which are rated in the lower rating categories
of the established rating services (Baa or lower by Moody's and BBB or lower by
Standard & Poor's), or in unrated securities of comparable quality. Additional
information regarding various bond ratings is set forth in Appendix B hereto.
Securities rated Ba or lower by Moody's and BB or lower by Standard & Poor's,
commonly known as "junk bonds", are considered by those rating agencies to have
varying degrees of speculative characteristics. Consequently, although they can
be expected to provide higher yields, such securities may be subject to greater
market fluctuations and risk of loss of income and principal than lower
yielding, higher-rated fixed-income securities. Because investment in such high-
yield securities entails relatively greater risk of loss of income or principal,
an investment in the High Yield Portfolio may not constitute a complete
investment program and may not be appropriate for all investors.
The High Yield Portfolio anticipates that under normal circumstances more
than 80% of its assets will be invested in fixed-income securities, including
convertible and non-convertible debt securities and preferred stock. The
remaining assets of the Portfolio may be held in cash or cash equivalents. The
High Yield Portfolio does not intend to invest in common stocks, rights or other
equity securities, but may acquire or hold such securities (if consistent with
its objectives) when they are acquired in unit offerings with fixed-income
securities or in connection with an actual or proposed conversion or exchange of
fixed-income securities.
Selection and supervision by the management of the Fund of investments in
lower-rated fixed-income securities involves continuous analysis of individual
issuers, general business conditions and other factors which may be too
time-consuming or too costly for the average investor. The furnishing of these
services does not, of course, guarantee successful results. The analysis by
Merrill Lynch Asset Management, the Fund's investment adviser (the "Investment
Adviser"), of issuers includes, among other things, historic and current
financial conditions, current and anticipated cash flow and borrowing
requirements, value of assets in relation to historical cost, strength of
management, responsiveness to business conditions, credit standing, and current
and anticipated results of operations.
15
<PAGE>
Analysis of general business conditions and other factors may include
anticipated changes in economic activity and interest rates, the availability of
new investment opportunities, and the economic outlook for specific industries.
While the Investment Adviser considers as one factor in its credit analysis the
ratings assigned by the rating services, the Investment Adviser performs its own
independent credit analysis of issuers and consequently, the Portfolio may
invest, without limit, in unrated securities. As a result, the High Yield
Portfolio's ability to achieve its investment objective may depend to a greater
extent on the Investment Adviser's own credit analysis than the Portfolios which
invest in higher rated securities. Although the High Yield Portfolio will invest
primarily in lower-rated securities, it will not invest in securities in the
lowest rating categories (Ca for Moody's and CC for Standard & Poor's) unless
the Investment Adviser believes that the financial condition of the issuer or
the protection afforded to the particular securities is stronger than would
otherwise be indicated by such low ratings. Securities which are subsequently
downgraded may continue to be held and will be sold only if, in the judgment of
the Investment Adviser, it is advantageous to do so.
When changing economic conditions and other factors cause the yield
difference between lower-rated and higher-rated securities to narrow, the High
Yield Portfolio may purchase higher-rated securities if the Investment Adviser
believes that the risk of loss of income and principal may be substantially
reduced with only a relatively small reduction in yield. In addition, under
unusual market or economic conditions, the High Yield Portfolio for temporary
defensive purposes may invest up to 100% of its assets in securities issued or
guaranteed by the United States Government or its instrumentalities or agencies,
certificates of deposit, bankers' acceptances and other bank obligations,
commercial paper rated in the highest category by an established rating agency,
or other fixed-income securities deemed by the Investment Adviser to be
consistent with a defensive posture, or may hold its assets in cash. The yield
on such securities may be lower than the yield on lower-rated fixed-income
securities.
Risk Factors. Junk bonds are regarded as being predominantly speculative as
to the issuer's ability to make payments of principal and interest. Investment
in such securities involves substantial risk. Issuers of junk bonds may be
highly leveraged and may not have available to them more traditional methods of
financing. Therefore, the risks associated with acquiring the securities of such
issuers generally are greater than is the case with higher-rated securities. For
example, during an economic downturn or a sustained period of rising interest
rates, issuers of junk bonds may be more likely to experience financial stress,
especially if such issuers are highly leveraged. In addition, the market for
junk bonds is relatively new and has not weathered a major economic recession,
and it is unknown what effects such a recession might have on such securities.
During such periods, such issuers may not have sufficient revenues to meet their
interest payment obligations. The issuer's ability to service its debt
obligations also may be adversely affected by specific issuer developments, or
the issuer's inability to meet specific projected business forecasts, or the
unavailability of additional financing. The risk of loss due to default by the
issuer is significantly greater for the holders of junk bonds because such
securities may be unsecured and may be subordinated to other creditors of the
issuer. While the high yield bonds in which the High Yield Portfolio may invest
normally do not include securities which, at the time of investment, are in
default or the issuers of which are in bankruptcy, there can be no assurance
that such events will not occur after the Portfolio purchases a particular
security, in which case the Portfolio may experience losses and incur costs.
Junk bonds frequently have call or redemption features that would permit an
issuer to repurchase the security from the High Yield Portfolio. If a call were
exercised by the issuer during a period of declining interest rates, the High
Yield Portfolio likely would have to replace such called security with a lower
yielding security, thus decreasing the net investment income to the High Yield
Portfolio and dividends to shareholders.
In an effort to minimize the risk of issuer default or bankruptcy, the High
Yield Portfolio diversifies its holdings among many issuers. However, there can
be no assurance that diversification will protect the High Yield Portfolio from
widespread defaults brought about by a sustained economic downturn.
Junk bonds tend to be more volatile than higher-rated fixed-income
securities, so that adverse economic events may have a greater impact on their
prices and yields than on higher-rated fixed-income securities. Zero coupon
bonds and bonds which pay interest and/or principal in additional bonds rather
than in cash are especially volatile. Like higher-rated fixed-income securities,
junk bonds are generally purchased
16
<PAGE>
and sold through dealers who make a market in such securities for their own
accounts. However, there are fewer dealers in this market, which may be less
liquid than the market for higher-rated fixed-income securities, even under
normal economic conditions. Also, there may be significant disparities in the
prices quoted for junk bonds by various dealers. Adverse economic conditions or
investor perceptions (whether or not based on economic fundamentals) may impair
the liquidity of this market, and may cause the prices the High Yield Portfolio
receives for its securities to be reduced, or the Portfolio may experience
difficulty in liquidating a portion of its portfolio when necessary to meet its
liquidity needs or in response to a specific economic event such as a
deterioration in the creditworthiness of the issuer. Under such conditions,
judgment may play a greater role in valuing certain of the Portfolio's
securities than in the case of securities trading in a more liquid market.
Adverse publicity and investor perceptions, which may not be based on
fundamental analysis, also may decrease the value and liquidity of junk bonds,
particularly in a thinly traded market. Factors adversely affecting the market
value of such securities are likely to affect adversely the High Yield
Portfolio's net asset value. In addition, the High Yield Portfolio may incur
additional expenses to the extent that it is required to seek recovery upon a
default on a portfolio holding or to participate in the restructuring of the
obligation. The table below shows the average monthly dollar-weighted market
value, by Standard & Poor's rating category, of the securities held by the
Portfolio during the year ended December 31, 1993.
% MARKET VALUE
RATING % NET ASSETS CORPORATE BONDS
- --------- --------------- ----------------
AAA 0.05% 0.05%
AA -- --
A 0.59 0.65
BBB 1.93 1.80
BB 16.53 17.91
B 52.89 57.51
CCC 4.14 3.92
CC 0.67 0.80
C 1.98 2.32
D -- --
NR 13.68 15.04
----------------
100.00%
----------------
----------------
CAPITAL STOCK PORTFOLIO
The Capital Stock Portfolio seeks long-term growth of capital and income,
plus moderate current income. The Capital Stock Portfolio generally invests in
equity securities which are considered to be of good or improving quality or
which are thought to be undervalued based on criteria such as historical
price/book value ratios and price/earnings ratios. When market or financial
conditions warrant, the Capital Stock Portfolio may temporarily make defensive
investments in other securities, including non-convertible, long-term debt
securities, "deep discount" corporate debt securities of investment grade,
convertible securities or cash or money market securities to produce interest
income.
GROWTH STOCK PORTFOLIO
The investment objective of the Growth Stock Portfolio is to seek long-term
growth of capital by investing in a diversified portfolio of securities,
primarily common stocks, of aggressive growth companies that the Investment
Adviser believes have special investment value. Companies are selected on the
basis of their long-term potential for expanding their earnings, profitability
and size or for gaining increased market recognition for their securities.
Current income is not a factor in the selection of such securities. While
aggressive growth companies may present above-average risks, properly selected
companies of this type also have the potential to increase their earnings at a
rate in excess of the general growth of the economy. The Growth Stock Portfolio
attempts to achieve its objective by focusing on the long-range view of a
company's prospects through a fundamental analysis of its management, financial
structure, product development, marketing ability and other relevant factors.
Full realization of the market potential of these companies frequently takes
time, and for this reason, the Growth Stock Portfolio should be considered as
long-term investment and not as a vehicle for seeking short-term profits.
The investment emphasis of the Growth Stock Portfolio is on equities,
primarily common stocks and, to a lesser extent, securities convertible into
common stocks and rights to subscribe for common stocks, and the Growth Stock
Portfolio maintains at least 80% of its net assets invested in equity securities
of growth companies except during defensive periods. The Growth Stock Portfolio
may, as a temporary defensive measure and to provide for redemptions, hold other
types of securities including non-convertible preferred stocks and debt
securities, government and money market securities or cash, in such proportions
as, in the opinion of management, prevailing market or economic conditions
warrant.
17
<PAGE>
MULTIPLE STRATEGY PORTFOLIO
The investment objective of the Multiple Strategy Portfolio is to seek a
high total investment return consistent with prudent risk through a fully
managed investment policy utilizing equity, intermediate and long-term debt and
money market securities. Total investment return consists of current income,
including dividends, interest, and discount accruals, and capital appreciation.
The Investment Adviser may vary the composition of the Portfolio from time to
time based upon an evaluation of economic and market trends and the anticipated
relative total return available from a particular type of security. Accordingly,
the Multiple Strategy Portfolio may, at any given time, be substantially
invested in equity securities, bonds and notes or money market securities.
Achieving this objective depends on management's abilities to assess the effect
of economic and market trends on different sectors of the market. There can be
no assurances that the investment objective of the Portfolio will be achieved.
The Multiple Strategy Portfolio may invest in those money market securities
which are eligible investments for the Fund's Money Reserve Portfolio as set
forth in Appendix A hereto. It may also invest in intermediate and long-term
debt securities, including convertible securities, and in preferred and
convertible preferred stocks which are rated at the time of purchase BBB or
better by Standard & Poor's or Baa or better by Moody's, or in unrated
securities of comparable quality, and will invest primarily in such securities
which are rated A or better by either rating agency. The common stocks in which
the Portfolio will invest will be primarily stocks of large-capitalization
quality companies. Generally, the characteristics of such companies include a
strong balance sheet, good financial resources, a satisfactory rate of return on
capital, a good industry position and superior management skills. The Investment
Adviser believes that companies that conform most closely to these
characteristics tend to exhibit generally consistent earnings growth.
The Multiple Strategy Portfolio may also invest in equity and debt
securities of foreign issuers, including non-U.S. dollar denominated equity and
debt securities, Eurodollar securities and securities issued, assumed or
guaranteed by foreign governments or political subdivisions or instrumentalities
thereof. As a matter of operating policy, the Multiple Strategy Portfolio will
limit its investment in foreign securities to 25% of its total assets, taken at
market value at the time of each investment.
Because of the fully managed approach of the Portfolio, portfolio turnover
may be greater resulting in increased brokerage charges to the Portfolio.
NATURAL RESOURCES PORTFOLIO
The investment objectives of the Natural Resources Portfolio are to achieve
long-term growth of capital and to protect the purchasing power of shareholders'
capital by investing primarily in a portfolio of equity securities (e.g., common
stocks and securities convertible into common stocks) of domestic and foreign
companies with substantial natural resource assets. The Portfolio also may
invest in debt, preferred or convertible securities, the value of which is
related to the market value of some natural resource asset ("asset-based
securities"). See "Asset-Based Securities" below. Management of the Fund will
seek to identify companies or asset-based securities it believes are
attractively priced relative to the intrinsic value of the underlying natural
resource assets or are especially well positioned to benefit during particular
portions of inflationary cycles. There can be no assurance that the objectives
of the Portfolio will be realized.
IN SEEKING TO PROTECT THE PURCHASING POWER OF SHAREHOLDERS' CAPITAL, THE
PORTFOLIO HAS RESERVED THE RIGHT, WHEN MANAGEMENT OF THE FUND ANTICIPATES
SIGNIFICANT ECONOMIC, POLITICAL OR FINANCIAL INSTABILITY, SUCH AS HIGH
INFLATIONARY PRESSURES OR UPHEAVAL IN THE FOREIGN CURRENCY EXCHANGE MARKETS, TO
INVEST A MAJORITY OF THE PORTFOLIO'S ASSETS IN COMPANIES THAT EXPLORE FOR,
EXTRACT, PROCESS OR DEAL IN GOLD OR IN ASSET-BASED SECURITIES INDEXED TO THE
VALUE OF GOLD BULLION. Such a switch in investment strategies could require the
Portfolio to liquidate portfolio securities and incur transaction costs. The
Fund has been advised by one of the Insurance Companies that, in the Insurance
Company's opinion, it is uncertain under the current federal tax law whether
the Portfolio may concentrate its investments in gold and gold-related
securities without adversely affecting the federal tax status of the
Policies. Accordingly, the Insurance Company has requested, and
management of the Fund has agreed, that the Natural Resources Portfolio will
not concentrate its investments in such securities until the Insurance
Company has advised the Fund that such uncertainty has been resolved
favorably.
18
<PAGE>
Management attempts to achieve the investment objectives of the Portfolio
by seeking to identify securities of companies which, in its opinion, are
undervalued relative to the value of natural resource holdings of such companies
in light of current and anticipated economic or financial conditions. Natural
resource assets are materials derived from natural sources which have economic
value. The Fund will consider a company to have substantial natural resource
assets when, in management's opinion, the company's holdings of the assets are
of such magnitude, when compared to the capitalization, revenues or operating
profits of the company, that changes in the economic value of the assets will
affect the market price of the equity securities of such company. Generally, a
company has substantial natural resource assets when at least 50% of the
non-current assets, capitalization, gross revenues or operating profits of the
company in the most recent or current fiscal year are involved in or result
from, directly or indirectly through subsidiaries, exploring, mining, refining,
processing, fabricating, dealing in or owning natural resource assets. Examples
of natural resource assets include precious metals (e.g., gold, silver and
platinum), ferrous and nonferrous metals (e.g., iron, steel, aluminum and
copper), strategic metals (e.g., uranium and titanium), hydrocarbons (e.g.,
coal, oil and natural gas), timberland, undeveloped real property and
agricultural commodities. The Portfolio presently does not intend to invest
directly in natural resource assets or contracts related thereto.
Management of the Fund believes that, based upon past performance, the
securities of specific companies that hold different types of substantial
natural resource assets may move relatively independently of one another during
different stages of inflationary cycles due to different degrees of demand for,
or market values of, their respective natural resource holdings during
particular portions of such inflationary cycles. The Portfolio's fully managed
investment approach enables it to switch its emphasis among various industry
groups depending upon management's outlook with respect to prevailing trends and
developments.
The Natural Resources Portfolio may seek to hedge its portfolio against
adverse market fluctuations by writing covered call options or purchasing put
options on portfolio securities, writing call options or purchasing put options
on stock indices, or by purchasing or selling stock index futures contracts and
options thereon. The Portfolio may also seek to hedge its portfolio of
non-dollar denominated securities and other assets or liabilities against
adverse currency fluctuations by writing call options and purchasing put options
on currency, by buying or selling futures contracts on currency and options
thereon and by engaging in forward foreign exchange transactions. See
"Transactions in Options, Futures and Currency."
The Portfolio at all times, except during defensive periods, will maintain
at least 65% of its total assets invested in companies with substantial natural
resource assets or in asset-based securities. Current income from dividends and
interest will not be a primary consideration in selecting securities. The
Portfolio reserves the right as a temporary defensive measure and to provide for
redemptions, to hold short-term U.S. Government securities, money market
securities, including repurchase agreements, or cash, in such proportions as, in
the opinion of management, prevailing market or economic conditions warrant.
Except during extraordinary periods, the Portfolio would not expect that such
securities or cash held for redemption would exceed 20% of its total assets.
Asset-Based Securities. The Portfolio may invest in debt securities,
preferred stocks or convertible securities, the principal amount, redemption
terms or conversion terms of which are related to the market price of some
natural resource asset such as gold bullion. For the purposes of the Portfolio's
investment policies, these securities are referred to as "asset-based
securities." The Portfolio will purchase only asset-based securities which are
rated, or are issued by issuers that have outstanding debt obligations rated,
investment grade (that is AAA, AA, A or BBB by Standard & Poor's or Aaa, Aa, A
or Baa by Moody's or commercial paper rated A-1 by Standard & Poor's or Prime-1
by Moody's) or of issuers that the Investment Adviser has determined to be of
similar creditworthiness. If the asset-based security is backed by a bank letter
of credit or other similar facility, the Investment Adviser may take such
backing into account in determining the creditworthiness of the issuer. While
the market prices for an asset-based security and the related natural resource
asset generally are expected to move in the same direction, there may not be
perfect correlation in the two price movements. Asset-based securities may not
be secured by a security interest in or claim on the underlying natural resource
asset. The asset-based securities in which the Portfolio may invest may bear
interest or pay preferred dividends at below market (or even relatively nominal)
rates. As an example, assume gold is selling at a market price of $300 per ounce
and an issuer sells a $1,000 face amount gold-related note with a seven-
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year maturity, payable at maturity at the greater of either $1,000 in cash or
the then market price of three ounces of gold. If, at maturity, the market price
of gold is $400 per ounce, the amount payable on the note would be $1,200.
Certain asset-based securities may be payable at maturity in cash at the stated
principal amount or, at the option of the holder, directly in a stated amount of
the asset to which it is related. In such an instance, because the Portfolio
presently does not intend to invest directly in natural resource assets, the
Portfolio would sell the asset-based security in the secondary market, to the
extent one exists prior to maturity, if the value of the stated amount of the
asset exceeds the stated principal amount, and thereby realize the appreciation
in the underlying asset.
Risk Factors. As indicated above, under certain circumstances, the
Portfolio has reserved the right to invest a majority of its assets in
gold-related companies or securities. Based on historic experience, during
periods of economic or financial instability, the securities of such companies
may be subject to extreme price fluctuations, reflecting the high volatility of
gold prices during such periods. In addition, the instability of gold prices may
result in volatile earnings of gold-related companies which, in turn, may affect
adversely the financial condition of such companies. Gold mining companies also
are subject to the risks generally associated with mining operations.
The major producers of gold include the Republic of South Africa, the
Soviet Union, Canada, the United States, the People's Republic of China, the
Philippines and Australia. Sales of gold by the Soviet Union and China are
largely unpredictable and often relate to political and economic considerations
rather than to market forces. Economic, social and political developments within
South Africa may affect significantly South African gold production.
The Portfolio presently does not intend to invest in companies the assets
of which are located primarily in the Republic of South Africa, which produces
approximately 40% of the gold mined in non-Communist nations. This limitation
may affect adversely the Portfolio's ability to invest in gold-related
securities and may result during certain periods in the Portfolio restricting
its investments to relatively few companies. This limitation is not a
fundamental policy of the Portfolio and may be changed by the directors of the
Fund, without a vote of the shareholders, if they determine that such action is
warranted. The Portfolio will notify its shareholders of any change in this
policy with respect to South Africa.
See "Other Portfolio Strategies--Foreign Securities" for special
considerations in investments in foreign securities.
The Fund and Merrill Lynch Funds Distributor, Inc., the distributor of the
Fund's shares, reserve the right to suspend the sale of shares of the Natural
Resources Portfolio in response to conditions in the securities markets or
otherwise.
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GLOBAL STRATEGY PORTFOLIO
The investment objective of the Global Strategy Portfolio is to seek high
total investment return by investing primarily in a portfolio of equity and
fixed income securities, including convertible securities, of U.S. and foreign
issuers. Total investment return consists of interest, dividends, discount
accruals and capital changes, including changes in the value of non-dollar
denominated securities and other assets and liabilities resulting from currency
fluctuations. INVESTING ON INTERNATIONAL BASIS INVOLVES SPECIAL CONSIDERATIONS.
SEE "OTHER PORTFOLIO STRATEGIES--FOREIGN SECURITIES" BELOW.
The Global Strategy Portfolio seeks to achieve its objective by investing
primarily in the securities of issuers located in the United States, Canada,
Western Europe and the Far East. There are no prescribed limits on the
geographical allocation of the Portfolio among these regions. Such allocation
will be made primarily on the basis of the anticipated total return from
investments in the securities of issuers wherever located, considering such
factors as the condition and growth potential of the various economies and
securities markets and the issuers domiciled therein, anticipated movements in
interest rates in the various capital markets and in the value of foreign
currencies relative to the U.S. dollar, tax considerations and economic, social,
financial, national and political factors which may affect the climate for
investing within such securities markets. When, in the judgment of the
Investment Adviser, economic or market conditions warrant, the Portfolio
reserves the right to concentrate its investments in one or more capital
markets, including the United States. For additional information concerning the
risks of investing in foreign securities, see "Other Portfolio
Strategies--Foreign Securities."
The equity and convertible preferred securities in which the Global
Strategy Portfolio may invest are primarily securities issued by quality
companies. Generally, the characteristics of such companies include a strong
balance sheet, good financial resources, a satisfactory rate of return on
capital, a good industry position and superior management skills. The Investment
Adviser believes that companies that conform most closely to these
characteristics tend to exhibit generally consistent earnings growth.
The corporate debt securities, including convertible debt securities, in
which the Portfolio may invest will be primarily those rated BBB or better by
Standard and Poor's or Baa or better by Moody's or of comparable quality. The
Portfolio may also invest in debt obligations issued or guaranteed by sovereign
governments, political subdivisions thereof (including states, provinces and
municipalities) or their agencies or instrumentalities or issued or guaranteed
by international organizations designated or supported by governmental entities
to promote economic reconstruction or development ("supranational entities")
such as the International Bank for Reconstruction and Development (the "World
Bank") and the European Coal and Steel Community. Investments in securities of
supranational entities are subject to the risk that member governments will fail
to make required capital contributions and that a supranational entity will thus
be unable to meet its obligations.
When market or financial conditions warrant, the Global Strategy Portfolio
may invest as a temporary defensive measure up to 100% of its assets in
securities issued or guaranteed by the United States Government or its agencies
or instrumentalities, certificates of deposit, bankers' acceptances and other
bank obligations, commercial paper rated in the highest category by an
established rating agency, or other fixed income securities deemed by the
Investment Adviser to be consistent with a defensive posture, or may hold its
assets in cash.
The Global Strategy Portfolio may write covered call options and purchase
put options on its portfolio securities for the purpose of generating
incremental income or hedging its securities against market risk. The Portfolio
may seek to hedge its non-dollar denominated securities and other assets and
liabilities against adverse currency fluctuations by writing call options and
purchasing put options on currency, purchasing or selling futures contracts and
futures contract options on currency and entering into forward foreign exchange
transactions in currency. See "Transactions in Options, Futures and Currency."
BALANCED PORTFOLIO
The investment objective of the Balanced Portfolio is to seek a level of
current income and a degree of stability of principal not normally available
from an investment solely in equity securities and the opportunity for capital
appreciation greater than that normally available from an investment solely in
debt securities by investing in a balanced portfolio of fixed income and equity
securities. The Portfolio will seek current income by investing a portion of its
assets in a portfolio of intermediate to long-term debt, convertible debt and
money market securities. The Portfolio will seek capital appreciation primarily
by investing a portion of its assets in equity securities, including
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preferred and convertible preferred stock. At all times, the Portfolio will
maintain at least 25% of its net assets in senior fixed income securities. There
can be no assurance that the Portfolio's objective will be achieved.
The Portfolio will normally seek to maintain the allocation of its assets
between debt securities and equity securities at approximately equal percentages
of the Portfolio's net asset value. However, the prices of debt and equity
securities will not generally move in the same direction or to the same extent,
and, consequently, the relative percentages of the Portfolio's debt and equity
investments will vary. The Portfolio will seek to reduce such variations by
investing its available cash in securities of the appropriate type. However,
except as discussed below, the Portfolio is not obligated to sell portfolio
securities, including money market securities, in order to reduce such
discrepancies.
The Portfolio will normally limit its allocation of assets to equity
securities to no more than 50% of its net assets. To the extent its equity
position exceeds this limitation, because of changes in the value of portfolio
securities or otherwise, the Portfolio will seek to reduce its equity position
to less than 50% of net assets by selling such securities at such times and in
such amounts as management of the Fund deems appropriate in light of market
conditions and other pertinent factors. See "Dividends, Distributions and
Taxes-- Tax Treatment of the Fund."
The Portfolio will generally emphasize investment in common stocks of
larger-capitalization issuers and in investment-grade debt obligations. The
Portfolio may also seek to enhance the return on its common stock portfolio by
writing covered call options listed on United States securities exchanges. Under
unusual market or economic conditions, the Portfolio for temporary defensive
purposes may invest up to 100% of its assets in securities issued or guaranteed
by the U.S. Government or its agencies or instrumentalities, certificates of
deposit, bankers' acceptances and other bank obligations, commercial paper rated
in the highest category by an established rating agency or other fixed income
securities deemed by the Investment Adviser to be consistent with a defensive
posture or may hold its assets in cash.
NON-DIVERSIFIED PORTFOLIOS
The Natural Resources and Global Strategy Portfolios are each classified as
a non-diversified investment company under the Investment Company Act of 1940.
However, each Portfolio will have to limit its investments to the extent
required by the diversification requirements applicable to regulated investment
companies under the Code. To qualify as a regulated investment company, a
Portfolio, at the close of each fiscal quarter, may not have more than 25% of
its total assets invested in the securities (except obligations of the U.S.
Government, its agencies or instrumentalities) of any one issuer and with
respect to 50% of its assets, (i) may not have more than 5% of its total assets
invested in the securities of any one issuer and (ii) may not own more than 10%
of the outstanding voting securities of any one issuer.
INVESTMENT RESTRICTIONS
The Fund has adopted a number of restrictions and policies relating to the
investment of its assets and its activities which are fundamental policies and
may not be changed without the approval of the holders of the Fund's outstanding
voting securities (including a majority of the shares of each Portfolio).
Investors are referred to the Statement of Additional Information for a complete
description of such restrictions and policies.
OTHER PORTFOLIO STRATEGIES
Lending of Portfolio Securities. Each Portfolio of the Fund may from time
to time lend securities (but not in excess of 33 1/3% of its total assets) from
its portfolio to brokers, dealers and financial institutions and receive
collateral in cash or U. S. Treasury securities which while the loan is
outstanding will be maintained at all times in an amount equal to at least 100%
of the current market value of the loaned securities plus accrued interest. Such
cash collateral will be invested in short-term securities, the income from which
will increase the return to the Portfolio.
Liquidity. In order to assure that each Portfolio of the Fund has
sufficient liquidity, as a matter of operating policy no Portfolio may invest
more than 10% of its net assets in securities for which market disposition is
not readily available. Market disposition may not be readily available for
repurchase agreements maturing in more than seven days and for securities having
restrictions on resale.
While no Portfolio may purchase illiquid securities in an amount exceeding
10% of its net assets, each
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Portfolio may purchase without regard to that limitation securities that are not
registered under the Securities Act of 1933 (the "Securities Act"), but that can
be offered and sold to "qualified institutional buyers" under Rule 144A under
the Securities Act, provided that the Fund's Board of Directors continuously
determines, based on the trading markets for the specific Rule 144A security,
that it is liquid. The Board of Directors may adopt guidelines and delegate to
the Investment Adviser the daily function of determining and monitoring
liquidity of restricted securities. The Board has determined that securities
which are freely tradeable in their primary market offshore should be deemed
liquid. The Board, however, will retain sufficient oversight and be ultimately
responsible for the determinations.
Since it is not possible to predict with assurance exactly how the market
for restricted securities sold and offered under Rule 144A will develop, the
Board of Directors will carefully monitor each Portfolio's investments in these
securities, focusing on such factors, among others, as valuation, liquidity and
availability of information. This investment practice could have the effect of
increasing the level of illiquidity in each Portfolio to the extent that
qualified institutional buyers become for a time uninterested in purchasing
these restricted securities.
Forward Commitments. Each Portfolio of the Fund may purchase U.S.
Government securities and corporate debt obligations on a when-issued basis, and
it may purchase or sell such securities for delayed delivery. These transactions
occur when securities are purchased or sold by the Portfolio with payment and
delivery taking place in the future to secure what is considered an advantageous
yield and price to the Portfolio at the time of entering into the transaction.
The value of the security on the delivery date may be more or less than its
purchase price. The Portfolio will maintain a segregated account with its
custodian of cash or liquid, high-grade debt obligations in an aggregate equal
to the amount of its commitments in connection with such delayed delivery and
purchase transactions. In order for shares of the Portfolios to remain eligible
investments for the Accounts, the Fund has undertaken to comply with certain
limits on forward commitments in accordance with state insurance laws.
Standby Commitment Agreements. The High Yield Portfolio may from time to
time enter into standby commitment agreements. Such agreements commit the
Portfolio, for a stated period of time, to purchase a stated amount of a fixed
income security which may be issued and sold to the Portfolio at the option of
the issuer. The price and coupon of the security is fixed at the time of the
commitment. At the time of entering into the agreement the Portfolio is paid a
commitment fee which is typically approximately 0.5% of the aggregate purchase
price of the security which the Portfolio has committed to purchase. The
Portfolio will at all times maintain a segregated account with its custodian of
cash or liquid, high-grade debt obligations in an amount equal to the purchase
price of the securities underlying the commitment. There can be no assurance
that the securities subject to a standby commitment will be issued, and the
value of the security, if issued, on the delivery date may be more or less than
its purchase price.
Foreign Securities. No Portfolio, other than the Capital Stock Portfolio,
Multiple Strategy Portfolio, Natural Resources Portfolio or Global Strategy
Portfolio, may invest in securities of foreign issuers if at the time of
acquisition more than 10% of its total assets, taken at market value at the time
of the investment, would be invested in such securities; provided, however, that
up to 25% of the total assets of such Portfolio, other than the Multiple
Strategy Portfolio, Natural Resources Portfolio or Global Strategy Portfolio,
may be invested in securities (i) issued, assumed or guaranteed by foreign
governments, or political subdivisions or instrumentalities thereof, (ii)
assumed or guaranteed by domestic issuers, including Eurodollar securities, or
(iii) issued, assumed or guaranteed by foreign issuers having a class of
securities listed for trading on the New York Stock Exchange. In order for
shares of the Portfolios to remain eligible investments for the Accounts, the
Fund has undertaken to comply with certain diversification requirements in
accordance with state insurance laws. As a matter of operating policy, the
Multiple Strategy Portfolio will not invest in the securities of foreign issuers
if at the time of acquisition more than 25% of its total assets would be
invested in such securities, and the Capital Stock Portfolio will not invest in
such securities if at the time of acquisition more than 20% of its total assets
would be invested in such securities. In addition, as a matter of operating
policy, the Balanced Portfolio will not invest any portion of its assets in the
securities of foreign issuers.
Investments in foreign securities, particularly those of non-governmental
issuers, involve considerations and risks which are not ordinarily associated
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with investing in domestic issuers. These considerations and risks include
changes in currency rates, currency exchange control regulations, the
possibility of expropriation, the unavailability of financial information or the
difficulty of interpreting financial information prepared under foreign
accounting standards, less liquidity and more volatility in foreign securities
markets, the impact of political, social or diplomatic developments, and the
difficulty of assessing economic trends in foreign countries. If it should
become necessary, the Fund could encounter greater difficulties in invoking
legal processes abroad than would be the case in the United States. The
operating expense ratio of a Fund investing in foreign securities can be
expected to be higher than that of an investment company investing exclusively
in United States securities because the expenses of the Fund, such as
custodial and brokerage costs, are higher. Transaction costs in foreign
securities may be higher. In addition, net investment income received by a
Portfolio on a foreign security may be subject to withholding and other taxes
imposed by foreign governments which will reduce the Portfolio's net investment
income. The Investment Adviser will consider these and other factors before
investing in foreign securities, and will not make such investments unless, in
its opinion, such investments will meet the standards and objectives of a
particular Portfolio. As a matter of operating policy, no Portfolio which
may invest in foreign securities (other than the Natural Resources Portfolio,
Capital Stock Portfolio and Global Strategy Portfolio) may concentrate its
investments in any particular foreign country, and each such Portfolio (other
than the Multiple Strategy Portfolio, High Yield Portfolio, Capital Stock
Portfolio, Natural Resources Portfolio and Global Strategy Portfolio) will
purchase only securities issued in dollar denominations. A Portfolio's return on
investments in non-dollar-denominated securities may be reduced or enhanced as a
result of changes in foreign currency rates during the period in which the
Portfolio holds such investments.
TRANSACTIONS IN OPTIONS, FUTURES AND CURRENCY
The Capital Stock Portfolio, Multiple Strategy Portfolio, Natural Resources
Portfolio, Global Strategy Portfolio and Balanced Portfolio may engage in
certain of the options, futures and currency transactions discussed below. A
Portfolio may engage in transactions in futures contracts, options on futures
contracts, forward foreign exchange contracts, currency options and put options
on portfolio securities and on stock indexes only for hedging purposes and not
for speculation. A Portfolio may write call options on portfolio securities and
on stock indexes for the purpose of achieving, through receipt of premium
income, a greater average total return than it would otherwise realize from
holding portfolio securities alone. There can be no assurance that the
objectives sought to be obtained from the use of these instruments will be
achieved. A Portfolio's use of such instruments may be limited by certain Code
requirements for qualification of the Portfolio for the favorable tax treatment
afforded investment companies.
Options on Portfolio Securities. The Capital Stock Portfolio, Multiple
Strategy Portfolio, Natural Resources Portfolio, Global Strategy Portfolio and
Balanced Portfolio may each, from time to time, sell ("write") exchange-traded
covered call options on portfolio securities. A covered call option is an option
where the Portfolio, in return for a premium, gives another party a right to buy
particular securities held by the Portfolio at a specified price for a certain
period of time. In return for the premium income realized from the sale of the
option, the Portfolio gives up the opportunity to profit from a price increase
in the underlying security above the option exercise price while the option is
in effect. In addition, the Portfolio's ability to sell the underlying security
will be limited until the option is closed or expires. The Portfolio will
attempt to achieve, through the receipt of premiums on covered options, a
greater average total return than it would otherwise realize from holding the
underlying securities alone.
The Multiple Strategy Portfolio, Natural Resources Portfolio and Global
Strategy Portfolio may purchase listed put options on portfolio securities. In
return for payment of a premium, the purchase of a put option gives the holder
thereof the right to sell the security underlying the option to another party at
a specified price until the put option is closed out, expires or is exercised.
The Portfolios will only purchase put options to seek to reduce the risk of a
decline in value of the underlying security. The total return on the security
may be reduced by the amount of the premium paid for the option by the
Portfolio.
Options on Stock Indices. The Multiple Strategy Portfolio and Natural
Resources Portfolio may write call options and purchase put options on stock
indices traded on a national securities exchange to seek to reduce the general
market risk of its portfolio of securities or specific industry sectors thereof.
Options on indices are similar to options on securities except that on exercise
or assignment, the parties to the contract pay or receive an amount of cash
equal to the difference between the closing value of the index and the exercise
price of the option times a specified
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multiple. The Portfolios may invest in index options based on a broad market
index, e.g., the Standard & Poor's 500 Composite Stock Price Index, or on a
narrow index representing an industry or market segment, e.g., the Amex Oil &
Gas Index. The effectiveness of a hedge employing stock index options will
depend primarily on the degree of correlation between movements in the value of
the index underlying the option and in the portion of the portfolio being
hedged. For further discussion concerning such options, see "Risk Factors in
Options, Futures and Currency Transactions" below and the Fund's Statement of
Additional Information.
Stock Index Futures Contracts. The Multiple Strategy Portfolio and Natural
Resources Portfolio may purchase and sell stock index futures contracts to hedge
its portfolio. The Portfolios may sell stock index futures contracts in
anticipation of or during a market decline to attempt to offset the decrease in
market value of the Portfolios' securities portfolio that might otherwise
result. When a Portfolio is not fully invested in the securities market and
anticipates a significant market advance, it may purchase stock index futures in
order to gain rapid market exposure that may in part or entirely offset
increases in the cost of securities that the Portfolio intends to purchase. A
stock index futures contract is a bilateral agreement pursuant to which a
Portfolio will agree to buy or deliver at settlement an amount of cash equal to
a dollar amount multiplied by the difference between the value of a stock index
at the close of the last trading day of the contract and the price at which the
futures contract is originally entered into. The Portfolios may engage in
transactions in futures contracts based on broad market indexes or on indexes on
industry or market segments. As with stock index options, the effectiveness of
the Portfolios' hedging strategies depends primarily upon the degree of
correlation between movements in the value of the securities subject to the
hedge and the index underlying the futures contract. See "Risk Factors in
Options, Futures and Currency Transactions."
Hedging Foreign Currency Risks. The Multiple Strategy Portfolio, the
Natural Resources Portfolio and the Global Strategy Portfolio are authorized to
deal in forward foreign exchange between currencies of the different countries
in which they will invest, including multi-national currency units, as a hedge
against possible variations in the foreign exchange rate between these
currencies. This hedging is accomplished through contractual agreements to
purchase or sell a specified currency at a specified future date (up to one
year) and price at the time of the contract. The dealings of a Portfolio in
forward foreign exchange will be limited to hedging involving either specific
transactions or portfolio positions. Transaction hedging is the purchase or sale
of forward foreign currency with respect to specific receivables or payables of
the Portfolio accruing in connection with the purchase and sale of its portfolio
securities, the sale and redemption of shares of the Portfolio or the payment of
dividends and distributions by the Portfolio. Position hedging is the sale of
forward foreign currency with respect to portfolio security positions
denominated or quoted in such foreign currency. The Portfolios will not
speculate in forward foreign exchange. Hedging against a decline in the value of
a currency does not eliminate fluctuations in the prices of portfolio securities
or prevent losses if the prices of such securities decline. Such transactions
also preclude the opportunity for gain if the value of the hedged currency
should rise. Moreover, it may not be possible for a Portfolio to hedge against a
devaluation that is so generally anticipated that the Portfolio is not able to
contract to sell the currency at a price above the devaluation level it
anticipates.
Each Portfolio is also authorized to purchase or sell listed foreign
currency options and foreign currency futures contracts as a hedge against
possible adverse variations in foreign exchange rates. Foreign currency options
provide the holder thereof the right to buy or to sell a currency at a fixed
price on or before a future date. A futures contract on a foreign currency is an
agreement between two parties to buy and sell a specified amount of a currency
for a set price on a future date. Such transactions may be effected with respect
to hedges on non-U.S. dollar denominated securities (including securities
denominated in multi-national currency units) owned by a Portfolio, sold by a
Portfolio but not yet delivered, or committed or anticipated to be purchased by
a Portfolio. As an illustration, the Portfolio may use such techniques to hedge
the stated value in United States dollars of an investment in a Japanese
yen-denominated security. In such circumstances, for example, the Portfolio may
purchase a foreign currency put option enabling it to sell a specified amount of
yen for dollars at a specified price by a future date. To the extent the hedge
is successful, a loss in the value of the yen relative to the dollar will tend
to be offset by an increase in the value of the put option. To offset, in whole
or in part, the cost of acquiring such a put option, the Portfolios may also
sell a call option which, if exercised, requires it to sell a
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specified amount of yen for dollars at a specified price by a future date (a
technique called a "straddle"). By selling the call option in this illustration,
the Portfolio gives up the opportunity to profit without limit from increases in
the relative value of the yen to the dollar.
The Portfolios will not speculate in foreign currency options or futures.
Accordingly, a Portfolio will not hedge a currency substantially in excess of
the market value of the securities denominated in such currency which it owns,
the expected acquisition price of securities which it has committed or
anticipates to purchase which are denominated in such currency, and, in the case
of securities which have been sold by the Portfolio but not yet delivered, the
proceeds thereof in its denominated currency. Further, the Portfolio will direct
its custodian to segregate liquid, high-grade debt securities having a market
value equal to any subsequent decrease in the value of such hedged security,
less any initial or variation margin held in the account of its broker.
As in the case of forward foreign exchange contracts, employing currency
futures and options in hedging transactions does not eliminate fluctuations in
the market price of a security and such transactions preclude or reduce the
opportunity for gain if the hedged currency should move in a favorable
direction.
Options on Futures Contracts. The Multiple Strategy Portfolio, Natural
Resources Portfolio and Global Strategy Portfolio may also purchase and write
call and put options on futures contracts in connection with their hedging
activities. Generally, these strategies are utilized under the same market
conditions (i.e., conditions relating to specific types of investments) in which
the Portfolios enter into futures transactions. The Portfolios may purchase put
options or write call options on futures contracts rather than selling the
underlying futures contract in anticipation of a decline in the equities markets
or in the value of a foreign currency. Similarly, the Portfolios may purchase
call options, or write put options on futures contracts, as a substitute for the
purchase of such futures to hedge against the increased cost resulting from
appreciation of equity securities or in the currency in which securities which
the Portfolios intend to purchase are denominated. Limitations on transactions
in options on futures contracts are described below.
Over-the-Counter Options. The Multiple Strategy Portfolio, Natural
Resources Portfolio and Global Strategy Portfolio may engage in options
transactions in the over-the-counter markets. In general, over-the-counter
("OTC") options are two-party contracts with price and terms negotiated by the
buyer and seller, whereas exchange-traded options are third-party contracts
(i.e., performance of the parties' obligations is guaranteed by an exchange or
clearing corporation) with standardized strike prices and expiration dates. OTC
options include put and call options on individual securities, cash settlement
options on groups of securities, and options on currency. A Portfolio may engage
in an OTC options transaction only if it is permitted to enter into transactions
in exchange-traded options of the same general type. The Portfolios will engage
in OTC options only with member banks of the Federal Reserve System and primary
dealers in U.S. Government securities or their affiliates which have capital of
at least $50 million or whose obligations are guaranteed by an entity having
capital of at least $50 million.
Restrictions on Use of Futures Transactions. Regulations of the Commodity
Futures Trading Commission ("CFTC") applicable to the Fund require that each
Portfolio's futures transactions constitute bona fide hedging transactions or,
with respect to non-hedging transactions, that a Portfolio not enter into such
transactions, if, immediately thereafter, the sum of the amount of initial
margin deposits on the Portfolio's existing non-hedging futures positions and
premiums paid for related options would exceed 5% of the market value of the
Portfolio's total assets.
When a Portfolio purchases a futures contract, a call option thereon or
writes a put option, an amount of cash and cash equivalents will be deposited in
a segregated account with the Fund's Custodian so that the amount so segregated,
plus the amount of initial and variation margin held in the account of its
broker, equals the market value of the futures contract, thereby insuring that
the use of such futures is unleveraged.
An order has been obtained from the Securities and Exchange Commission
which exempts the Fund from certain provisions of the Investment Company Act of
1940 in connection with transactions involving futures contracts and options
thereon.
Risk Factors in Options, Futures and Currency Transactions. A Portfolio's
ability to effectively hedge all or a portion of its portfolio of securities
through transactions in options on stock indexes and stock index futures depends
on the degree to which price movements in the index underlying the hedging
instrument correlates with price movements in the
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relevant portion of the securities portfolio. The securities portfolio will not
duplicate the components of the index. As a result, the correlation will not be
perfect. Consequently, a Portfolio bears the risk that the price of the
portfolio securities being hedged will not move in the same amount or direction
as the underlying index and that the Portfolio would experience a loss on one
position which is not completely offset by a gain on the other position. It is
also possible that there may be a negative correlation between the index
underlying an option or futures contract in which a Portfolio has a position and
the portfolio securities the Portfolio is attempting to hedge, which would
result in a loss on both the securities and the hedging instrument. A Portfolio
will invest in a hedging instrument only if, in the judgment of the Investment
Adviser, there is expected to be a sufficient degree of correlation between
movements in the value of the instrument and movements in the value of the
relevant portion of the portfolio of securities for such hedge to be effective.
There can be no assurance that the judgment will be accurate.
Investment in stock index and currency futures and options thereon entail
the additional risk of imperfect correlation between movements in the futures
price and the price of the underlying index or currency. The anticipated spread
between the prices may be distorted due to differences in the nature of the
markets, such as differences in margin and maintenance requirements, the
liquidity of such markets and the participation of speculators in the futures
market. However, the risk of imperfect correlation generally tends to diminish
as the maturity date of the futures contract or termination date of the option
approaches.
The Portfolios intend to enter into exchange-traded options and futures
transactions only if there appears to be a liquid secondary market for such
options or futures. However, there can be no assurance that a liquid secondary
market will exist at any specific time. Thus, it may not be possible to close an
options or futures transaction. The inability to close options and futures
positions could have an adverse impact on a Portfolio's ability to effectively
hedge its portfolio. There is also the risk of loss by a Portfolio of margin
deposits or collateral in the event of bankruptcy of a broker with whom a
Portfolio has an open position in an option or futures contract.
OTHER CONSIDERATIONS
The Investment Adviser has agreed with the Insurance Companies to use its
best efforts to assure that each Portfolio of the Fund complies with
certaininvestment limitations of the Internal Revenue Service in order for the
Policies to be treated as life insurance under the Internal Revenue Code. It is
not expected that any such investment limitations will materially affect the
ability of any Portfolio to achieve its investment objectives. See "Investment
Objectives and Policies of the Portfolios," page 13.
The New York insurance law requires that investments of the Fund be made
with the degree of care of an "ordinarily prudent person." In addition, the Fund
has undertaken, at the request of the State of California Department of
Insurance, to observe certain investment related requirements of the Insurance
Code of the State of California. The Investment Adviser believes that compliance
with these standards will not have any negative impact on the performance of any
of the Portfolios.
In order for shares of the Portfolios to remain eligible investments for
the Accounts, it may be necessary, from time to time, for a Portfolio to limit
its investments in certain types of securities and in certain markets in
accordance with the insurance laws or regulations of the various states in which
the Policies are sold.
DIRECTORS
The Directors of the Fund are four individuals, three of whom are not
considered to be "interested persons" of the Fund as defined in the Investment
Company Act of 1940. The Directors of the Fund are responsible for the overall
supervision of the operations of the Fund and perform the various duties imposed
on the directors of investment companies by the Investment Company Act of 1940.
The Board of Directors elects officers of the Fund annually.
The Directors of the Fund and their principal employment are as follows:
TERRY K. GLENN*--Executive Vice President of the Investment Adviser and
Fund Asset Man-
agement, L.P. ("FAM") and President and Director of the Distributor.
JACK B. SUNDERLAND--President and Director of American Independent Oil
Company, Inc. (energy company) since 1987.
STEPHEN B. SWENSRUD--Principal of Fernwood Associates (financial
consultants).
J. THOMAS TOUCHTON--Managing Partner of The Witt-Touchton Company (private
investment partnership). * Interested person, as defined in the Investment
Company Act of 1940, of the Fund.
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INVESTMENT ADVISER
The Fund has entered into an Investment Advisory Agreement, dated August 7,
1985, with Merrill Lynch Asset Management, L.P. (the "Investment Adviser"). The
Investment Adviser is a wholly-owned subsidiary of ML Group, Inc., a wholly-
owned subsidiary of Merrill Lynch & Co., Inc., a publicly-held financial
services
corporation. The address of the Investment Adviser is Box 9011, Princeton, New
Jersey 08540-9011. The Investment Adviser or its affiliate, FAM, presently acts
as the investment adviser to over 90 other registered investment companies.
While the Investment Adviser is at all times subject to the direction of
the Board of Directors of the Fund, the Investment Advisory Agreement provides
that the Investment Adviser, subject to review by the Board of Directors, is
responsible for the actual management of the Portfolios and has responsibility
for making decisions to buy, sell or hold any particular security. The
Investment Adviser provides the portfolio managers for each of the Portfolios,
who consider information from various sources, make the necessary investment
decisions and effect transactions accordingly. The Investment Adviser is also
obligated to perform certain administrative and management services for the Fund
and is obligated to provide all the office space, facilities, equipment and
personnel necessary to perform its duties under the Agreement. The Investment
Adviser has access to the full range of the securities and economic research
facilities of Merrill Lynch.
During the Fund's fiscal year ended December 31, 1993, the advisory fees
paid by the Fund to the Investment Adviser totalled $9,252,881 of which
$1,955,347 was paid by the Money Reserve Portfolio, $943,199 by the Intermediate
Government Bond Portfolio, $461,498 by the Long Term Corporate Bond Portfolio,
$693,049 by the Capital Stock Portfolio, $430,352 by the Growth Stock Portfolio,
$3,881,854 by the Multiple Strategy Portfolio, $272,599 by the High Yield
Portfolio, $47,974 by the Natural Resources Portfolio, $324,700 by the Global
Strategy Portfolio, and $242,309 by the Balanced Portfolio. In each case, the
advisory fees represented 0.32]% of the Portfolio's net assets. During the
Fund's fiscal year ended December 31, 1993, the total operating expenses
incurred by the Fund's Portfolios (including the advisory fees paid to the
Investment Adviser) before reimbursement of a portion of such expenses, were in
the following amounts: $2,096,153 by the Money Reserve Portfolio (representing
0.30% of its average net assets), $1,026,125 by the Intermediate Government Bond
Portfolio (representing 0.36% of its average net assets), $527,023 by the Long
Term Corporate Bond Portfolio (representing 0.38% of its average net assets),
$788,163 by the Capital Stock Portfolio (representing 0.38% of its average net
assets), $494,271 by the Growth Stock Portfolio (representing 0.38% of its
average net assets), $4,250,521 by the Multiple Strategy Portfolio (representing
0.36% of its average net assets), $354,609 by the High Yield Portfolio
(representing 0.43% of its average net assets), $85,136 by the Natural Resources
Portfolio (representing 0.59% of its average net assets), $449,884 by the Global
Strategy Portfolio (representing 0.46% of its average net assets), and $319,751
by the Balanced Portfolio (representing 0.43% of its average net assets).
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<PAGE>
Pursuant to an amended Reimbursement Agreement between Monarch, the
Investment Adviser and Merrill Lynch Life Agency, Inc., Monarch reimburses the
expenses of each Portfolio which exceed 0.50% of its average net assets. For the
fiscal year ended December 31, 1993, Monarch reimbursed a total of $25,903 in
expenses, of which $13,194 were attributed to the Global Strategy Portfolio
(representing 0.01% of its average net assets), and $12,709 were attributed to
the Natural Resources Portfolio (representing 0.09% of its average net assets).
Joel Heymsfeld has served as the Balanced Portfolio's Portfolio Manager
since June 1988, and as the Global Strategy Portfolio's Portfolio Manager since
February 1992. He is primarily responsible for each Portfolio's day-to-day
management. He has served as Vice-President of MLAM since 1978.
Kevin Rendino has served as the Capital Stock Portfolio's Portfolio Manager
since July 1993, and is primarily responsible for the Portfolio's day-to-day
management. He has served as Vice-President of MLAM since December 1993; Senior
Research Analyst from 1990 to 1992; and Corporate Analyst from 1988 to 1990.
Frederic Lutcher has served as the Growth Stock Portfolio's Portfolio
Manager since June 1989, and is primarily responsible for the Portfolio's
day-to-day management. He has served as Vice-President of MLAM since 1989.
Aldona Schwarz has served as the High Yield Portfolio's Portfolio Manager
since July 1993, and is primarily responsible for the Portfolio's day-to-day
management. She has served as Vice-President of MLAM since 1991 and as an
employee of the Investment Adviser since 1986.
Jay Harbeck has served as the Intermediate Government Bond Portfolio's
Portfolio Manager since July 1992, and as the Long Term Corporate Bond
Portfolio's Portfolio Manager since July 1992. He is primarily responsible for
each Portfolio's day-to-day management. He has served as Vice-President of MLAM
since 1986.
Jacqueline Rogers has served as the Money Reserve Portfolio's Portfolio
Manager since June 1991 and is primarily responsible for the Portfolio's
day-to-day management. She has served as Vice-President of MLAM since 1985.
Dennis Cummings has served as the Multiple Strategy Portfolio's Portfolio
Manager since April 1982, and is primarily responsible for the Portfolio's
day-to-day management. He has served as Vice-President of MLAM since 1978.
Peter Lehman has served as the Natural Resources Portfolio's Portfolio
Manager since January 1994, and is primarily responsible for the Portfolio's
day-to-day management. He has served as Vice-President of MLAM since 1994;
Senior Fund Analyst for an international fund managed by the Investment Advisor
from 1992 to 1994; and Director and Senior Portfolio Manager for Prudential
Insurance Company of America from 1989 to 1991.
29
<PAGE>
PORTFOLIO TRANSACTIONS AND
BROKERAGE
None of the Fund's Portfolios has any obligation to deal with any dealer or
group of dealers in the execution of transactions in portfolio securities.
Subject to policy established by the Board of Directors of the Fund, the
Investment Adviser is primarily responsible for the Fund's portfolio decisions
and the placing of the Fund's portfolio transactions. In placing orders, it is
the policy of each Portfolio to obtain the most favorable net results, taking
into account various factors, including price, dealer spread or commission, if
any, size of the transactions and difficulty of execution. While the Investment
Adviser generally seeks reasonably competitive spreads or commissions, the Fund
will not necessarily be paying the lowest spread or commission available.
Under the Investment Company Act of 1940, persons affiliated with the Fund
are prohibited from dealing with the Fund as a principal in the purchase and
sale of the Fund's portfolio securities unless an exemptive order allowing such
transactions is obtained from the Securities and Exchange Commission. Affiliated
persons of the Fund may serve as its broker in over-the-counter transactions
conducted on an agency basis. The Securities and Exchange Commission has issued
an order permitting the Fund to conduct certain principal transactions with
respect to the Money Reserve Portfolio with Merrill Lynch Government Securities
Inc. ("GSI") and Merrill Lynch Money Markets Inc. ("MMI") in U. S. Government
and government agency securities, and certain other money market securities,
subject to certain terms and conditions. During the year ended December 31,
1993, the Fund engaged in 34 transactions pursuant to the exemptive order
aggregating approximately $263.6 million.
For the year ended December 31, 1993, the Fund paid brokerage commissions
of approximately $3,518,138, of which $271,137 was paid to Merrill Lynch.
PURCHASE OF SHARES
The Fund is offering its shares, without sales charge, only for purchase by
the Accounts as an investment medium for the Policies. The Fund continuously
offers shares in each of its Portfolios to the Insurance Companies at prices
equal to the respective per share net asset value of the Portfolios. Merrill
Lynch Funds Distributor, Inc., a wholly-owned subsidiary of the Investment
Adviser, acts as the distributor of the shares. Net asset value is determined in
the manner set forth below under "Determination of Net Asset Value."
REDEMPTION OF SHARES
The Fund is required to redeem all full and fractional shares of the
Portfolios for cash. The redemption price is the net asset value per share next
determined after the initial receipt of proper notice of redemption.
DIVIDENDS, DISTRIBUTIONS AND TAXES
It is the Fund's intention to distribute substantially all the net
investment income, if any, of each Portfolio. For dividend purposes, net
investment income of each Portfolio, other than the Money Reserve Portfolio,
will consist of all payments of dividends or interest received by such Portfolio
less the estimated expenses of such Portfolio (including fees payable to the
Investment Adviser). Net investment income of the Money Reserve Portfolio (from
the time of the immediate preceding determination thereof) consists of (i)
interest accrued and/ or discount earned (including both original issue and
market discount), (ii) plus or minus all realized gains and losses on its
portfolio securities, (iii) less the estimated expenses of the Money Reserve
Portfolio (including the fees payable to the Investment Adviser) applicable to
that dividend period.
Dividends on the Money Reserve Portfolio are declared and reinvested daily
in additional full and fractional shares of the Portfolio. Dividends from
investment income of the Intermediate Government Bond, High Yield and Long-Term
Corporate Bond Portfolios are declared and reinvested monthly in additional full
and fractional shares of the respective Portfolios. Dividends from investment
income of the Natural Resources, Global Strategy, Balanced, Capital Stock,
Growth Stock and Multiple Strategy Portfolios will be declared at least
semi-annually and reinvested in additional full and fractional shares of the
respective Portfolios. All net realized long-term or short-term capital gains of
the Company, if any, other than short-term capital gains of the Reserve Assets
Fund, are declared and distributed annually after the close of the Company's
fiscal year to the shareholders
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of the Fund or Funds to which such gains are attributable. Short-term capital
gains are taxable as ordinary income.
TAX TREATMENT OF THE FUND
Each Portfolio intends to continue to qualify as a regulated investment
company under certain provisions of the Code. Under such provisions, a Portfolio
will not be subject to federal income tax on such part of its net ordinary
income and net realized capital gains which it distributes to shareholders. One
of the requirements to qualify for treatment as a regulated investment company
under the Code is that a Portfolio, among other things, derive less than 30% of
its gross income in each taxable year from gains (without deduction for losses)
from the sale or other disposition of stock, securities and certain options,
futures or forward contracts held for less than three months. This requirement
may limit the ability of certain Portfolios, including the Balanced Portfolio,
to dispose of certain securities at times when management of the Fund deems such
disposition appropriate or desirable. If a Portfolio earns original issue
discount income in a taxable year which is not represented by correlative cash
income, or if a Portfolio receives property rather than cash in payment of
interest, shareholders will be allocated income greater than the amount of cash
distributed to them. In addition, the Portfolio may have to dispose of
securities and use the proceeds thereof to make distributions in amounts
necessary to satisfy its distribution requirements under the Code.
TAX TREATMENT OF THE INSURANCE COMPANIES AS SHAREHOLDERS
Dividends paid by each Portfolio from its ordinary income and distributions
of each Portfolio's net realized capital gains are includible in the Insurance
Companies' gross income. Distributions of a Portfolio's net realized long-term
capital gains retain their character as long-term capital gains in the hands of
the Insurance Companies if certain requirements are met. The tax treatment of
such dividends and distributions depends on the Insurance Companies' tax status.
To the extent that income of a Portfolio represents qualified dividends on
common or preferred stock, its distributions to the Insurance Companies will be
eligible for the present 70% dividends received deduction applicable in the case
of a life insurance company as provided in the Code. Not later than sixty days
after the end of each calendar year, the Fund will send to the Insurance
Companies a written notice required by the Code designating the amount and
character of any distributions made during such year.
PERFORMANCE DATA
From time to time one or more of the Fund's Portfolios may include its
average annual total return and yield for various specified time periods in
advertisements or information furnished to present or prospective shareholders.
Average annual total return and yield are computed in accordance with formulas
specified by the Securities and Exchange Commission.
Average annual total return quotations for the specified periods will be
computed by finding the average annual compounded rates of return (based on net
investment income and any realized and unrealized capital gains or losses on
portfolio investments over such periods) that would equate the initial amount
invested to the redeemable value of such investment at the end of each period.
Average annual total return will be computed assuming all dividends and
distributions are reinvested and taking into account all applicable recurring
and nonrecurring expenses. Average annual total return quotations may be of
limited use for comparative purposes because they do not reflect charges imposed
at the Account level which, if included, would decrease total return.
Yield quotations will be computed based on a 30-day period by dividing (a)
the net income based on the yield to maturity of each security earned during the
period by (b) the average daily number of shares outstanding during the period
that were entitled to receive dividends multiplied by the maximum offering price
per share on the last day of the period. The yield for the 30-day period ending
December 31, 1993 for the Intermediate Government Bond Portfolio was 5.28%, for
the Long Term Corporate Bond Portfolio was 5.87%, and for the High Yield
Portfolio was 9.07%. The yield quotations may be of limited use for comparative
purposes because they do not reflect charges imposed at the Account level which,
if included, would decrease the yield.
Total return and yield figures are based on a Portfolio's historical
performance and are not intended to indicate future performance. The Portfolio's
total return and yield will vary depending on market conditions, the securities
comprising the Portfolio's portfolio, the Portfolio's operating expenses and the
amount of realized and unrealized net capital gains or losses during the period.
The value of an investment in the Portfolio will fluctuate and an investor's
shares, when
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<PAGE>
redeemed, may be worth more or less than their original cost.
On occasion, one or more of the Fund's Portfolios may compare its
performance to that of the Standard & Poor's 500 Composite Stock Price Index,
the Value Line Composite Index, the Dow Jones Industrial Average, or performance
data published by Lipper Analytical Services, Inc., Morningstar Publications,
Inc., Money Magazine, U.S. News & World Report, Business Week, CDA Investment
Technology, Inc., Forbes Magazine, Fortune Magazine, Chase Investment
Performance Digest, Financial Services Weekly, Kiplinger Personal Finance, The
Wall Street Journal, USA Today, Barrons, Strategic Insight, Donaghues,
Investor Business Daily and Ibbotson Associates. As with other performance data,
performance comparisons should not be considered representative of the
Portfolio's relative performance for any future period.
ADDITIONAL INFORMATION
DETERMINATION OF NET ASSET VALUE
The net asset value of the shares of each Portfolio is determined once
daily by the Investment Adviser immediately after the declaration of dividends,
if any, and is determined (i) for shares of the Money Reserve, Intermediate
Government Bond, Long Term Corporate Bond and High Yield Portfolios, at 4:00
P.M. New York City time on each day during which the New York Stock Exchange is
open for business, (ii) for shares of the Capital Stock, Growth Stock and
Balanced Portfolios, as of the time of the close of trading on the New York
Stock Exchange on each day during which such Exchange is open for trading, (iii)
for shares of the Multiple Strategy Portfolio as of the time of the close of
trading on the New York Stock Exchange or the close of trading on options or
futures exchanges on which the Fund is trading, whichever is later, on each day
during which such respective exchanges are open for business, and (iv) for
shares of the Natural Resources and Global Strategy Portfolios as of 4:15 P.M.
New York City time on each day the New York Stock Exchange is open for business.
The New York Stock Exchange is open on business days other than national
holidays (except for Martin Luther King Day, when it is open) and Good Friday.
Any assets or liabilities initially expressed in terms of non-U.S. dollar
currencies are translated into U.S. dollars at the prevailing market rates as
quoted by one or more banks or dealers on the day of valuation. A Portfolio's
net asset value will be computed only on days on which there is sufficient
trading in portfolio securities that its net asset value might be materially
affected, and only if an order for purchase, redemption or repurchase of
securities is received. The net asset value per share of each Portfolio other
than the Money Reserve Portfolio is computed by dividing the sum of the value of
the securities held by that Portfolio plus any cash or other assets (including
interest and dividends accrued) minus all liabilities (including accrued
expenses) by the total number of shares outstanding of that Portfolio at such
time, rounded to the nearest cent. Expenses, including the investment advisory
fees payable to the Investment Adviser, are accrued daily. The net asset value
of the Money Reserve Portfolio is determined pursuant to the "penny rounding"
method by adding the fair value of all securities and other assets in the
portfolio, deducting the portfolio's liabilities, dividing by the number of
shares outstanding and rounding the result to the nearest whole cent.
Except with respect to securities held by the Money Reserve and Multiple
Strategy Portfolios having a remaining maturity of 60 days or less, securities
held by each Portfolio will be valued as follows: Portfolio securities which are
traded on stock exchanges are valued at the last sale price as of the close of
business on the day the securities are being valued, or, lacking any sales, at
the mean between closing bid and asked prices. Securities other than money
market securities traded in the over-the-counter market are valued at the mean
between the bid and asked prices or yield equivalent as obtained from one or
more dealers that make markets in the securities. Portfolio securities which are
traded both in the over-the-counter market and on a stock exchange are valued
according to the broadest and most representative market, and it is expected
that for debt securities this ordinarily will be the over-the-counter market.
Options are valued at the last bid price in the case of options purchased and
the last asked price in the case of options written. Futures contracts are
valued at settlement price at the close of the applicable exchange. 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
Directors of the Fund. Securities held by the Money Reserve and Multiple
Strategy Portfolios with a remaining maturity of 60 days or less are valued on
an amortized cost basis, unless particular circumstances dictate otherwise.
ORGANIZATION OF THE FUND
The Fund was incorporated on September 4, 1980 as the Merrill Lynch
Investment Series Fund, Inc. On January 16, 1981, the Fund changed its name to
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<PAGE>
Merrill Lynch Series Fund, Inc. The authorized capital stock of the Fund
consists of 4,100,000,000 shares of Common Stock, par value $0.10 per share. The
shares of Common Stock are divided into twenty classes, Money Reserve Portfolio
Common Stock, Intermediate Government Bond Portfolio Common Stock, Long Term
Corporate Bond Portfolio Common Stock, High Yield Portfolio Common Stock,
Capital Stock Portfolio Common Stock, Growth Stock Portfolio Common Stock,
Multiple Strategy Portfolio Common Stock, Natural Resources Portfolio Common
Stock, Global Strategy Portfolio Common Stock, Balanced Portfolio Common Stock
and ten classes of Common Stock that have been designated classes A, B, C, D, E,
F, G, H, I and J, respectively. The Fund has no present plan to issue shares of
classes A, B, C, D, E, F, G, H, I or J Common Stock. Each class of Common Stock
consists of 100,000,000 shares except for the Money Reserve Portfolio which has
2,000,000,000 authorized shares and the Multiple Strategy Portfolio which has
300,000,000 authorized shares. All shares of Common Stock have equal voting
rights, except that only shares of the respective Portfolios are entitled to
vote on matters concerning only that Portfolio. Pursuant to the Investment
Company Act of 1940 and the rules and regulations thereunder, certain matters
approved by a vote of all shareholders of the Fund may not be binding on a class
whose shareholders have not approved such matter. Each issued and outstanding
share of a class is entitled to one vote and to participate equally in dividends
and distributions declared with respect to such class and in net assets of such
class upon liquidation or dissolution remaining after satisfaction of
outstanding liabilities. The shares of each class, when issued, will be fully
paid and nonassessable, have no preference, preemptive, conversion, exchange or
similar rights, and will be freely transferable. Holders of shares of any class
are entitled to redeem their shares as set forth under "Redemption of Shares."
Shares do not have cumulative voting rights and the holders of more than 50% of
the shares of the Fund voting for the election of directors can elect all of the
directors of the Fund if they choose to do so and in such event the holders of
the remaining shares would not be able to elect any directors. The Fund does not
intend to hold meetings of shareholders unless under the Investment Company Act
of 1940 shareholders are required to act on any of the following matters: (i)
election of directors; (ii) approval of aninvestment advisory agreement; (iii)
approval of a distribution agreement; and (iv) ratification of the selection of
independent accountants.
Monarch provided the initial capital for each of the Fund's Portfolios and
the Investment Adviser paid the initial organizational expenses of each
Portfolio. The Investment Adviser is reimbursed by Monarch for all such expenses
over a five-year period.
INDEPENDENT AUDITORS
Deloitte & Touche, Princeton, New Jersey, has been selected as the
independent auditors of the Fund. The selection of independent auditors is
subject to annual ratification by the Fund's shareholders.
CUSTODIAN
The Bank of New York, 110 Washington Street, New York, New York 10286, acts
as custodian (the "Custodian") of the Fund's assets.
TRANSFER AND DIVIDEND DISBURSING AGENT
Financial Data Services, Inc. ("FDS"), which is a wholly-owned subsidiaryof
Merrill Lynch & Co., Inc., acts as the Fund's transfer agent and is responsible
for the issuance, transfer and redemption of shares and the opening and
maintenance of shareholder accounts. FDS will receive an annual fee of $5,000
per Portfolio and will be entitled to reimbursement of out-of-pocket expenses.
Prior to June 1, 1990, BONY was the Fund's transfer agent.
LEGAL COUNSEL
Rogers & Wells, New York, New York, is counsel for the Fund.
REPORTS TO SHAREHOLDERS
The fiscal year of the Fund ends on December 31 of each year. The Fund will
send to its shareholders at least semi-annually reports showing the securities
of the Fund's Portfolios and other information. An annual report, containing
financial statements, audited by independent auditors, will be sent to
shareholders each year.
ADDITIONAL INFORMATION
This Prospectus does not contain all the information included in the
Registration Statement filed with the Securities and Exchange Commission under
the Securities Act of 1933 and the Investment Company Act of 1940, with respect
to the securities offered hereby, certain portions of which have been omitted
pursuant to the rules and regulations of the Securities and Exchange Commission.
The Statement of Additional Information, dated April 29, 1994, which forms
a part of the Registration Statement, is incorporated by reference into this
Prospectus. The Statement of Additional Information may be obtained without
charge as provided on the cover page of this Prospectus. The Registration
Statement, including the exhibits filed therewith, may be examined at the office
of the Securities and Exchange Commission in Washington, D.C.
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APPENDIX A
United States Government Securities. The Money Reserve, Intermediate
Government Bond, Multiple Strategy and Balanced Portfolios may invest in the
various types of marketable securities issued by or guaranteed as to
principaland interest by the U.S. Government and supported by the full faith and
creditof the U.S. Treasury. U.S. Treasury obligations differ mainly in the
length oftheir maturity. Treasury bills, the most frequently issued
marketablegovernment security, have a maturity of up to one year and are issued
on adiscount basis.
Government Agency Securities. The Money Reserve, Intermediate Government
Bond, Multiple Strategy and Balanced Portfolios may invest in government agency
securities, which are debt securities issued by government-sponsored
enterprises, federal agencies and international institutions. Such securities
are not direct obligations of the Treasury but involve government sponsorship or
guarantees by government agencies or enterprises. These Portfolios may invest in
all types of government agency securities currently outstanding or to be issued
in the future, including Government National Mortgage Association
mortgage-backed certificates, and other mortgage-backed government agency
securities.
Bank Money Instruments. The Money Reserve, Multiple Strategy and Balanced
Portfolios may invest in bank money instruments, such as certificates of
deposit, including variable-rate certificates of deposit, and bankers'
acceptances. Certificates of deposit are generally short-term, interest-bearing
negotiable certificates issued by commercial banks or savings and loan
associations against funds deposited in the issuing institution. Variable-rate
certificates of deposit are certificates of deposit on which the interest rate
is periodically adjusted prior to their stated maturity, usually at 30, 90 or
180 day intervals ("coupon dates"), based upon a specified market rate. As a
result of these adjustments, the interest rate on these obligations may be
increased or decreased periodically. Typically, dealers selling variable-rate
certificates of deposit to the Money Reserve, Multiple Strategy or Balanced
Portfolios agree to repurchase such instruments, at the Portfolios' option, at
par on the coupon dates. The dealers' obligations to repurchase these
instruments are subject to conditions imposed by the various dealers; such
conditions typically are the continued credit standing of the issuer and the
existence of reasonably orderly market conditions. The Money Reserve, Multiple
Strategy or Balanced Portfolios are also able to sell variable-rate certificates
of deposit in the secondary market. Variable-rate certificates of deposit
normally carry a higher interest rate than comparable fixed-rate certificates of
deposit because variable-rate certificates of deposit generally have a longer
stated maturity than comparable fixed-rate certificates of deposit.
A bankers' acceptance is a time draft drawn on a commercial bank by a
borrower usually in connection with an international commercial transaction (to
finance the import, export, transfer or storage of goods). The borrower is
liable for payment as well as the bank, which unconditionally guarantees to pay
the draft at its face amount on the maturity date. Most acceptances have
maturities of six months or less and are traded in secondary markets prior to
maturity.
The Money Reserve Portfolio may invest in certificates of deposit and
bankers' acceptances issued by foreign banks or branches or subsidiaries of U.S.
or foreign banks ("Eurodollar" obligations) or U.S. branches or subsidiaries of
foreign banks ("Yankeedollar" obligations).
The obligations of such foreign branches and subsidiaries may be the
general obligation of the parent bank or may be limited to the issuing branch or
subsidiary by the terms of the specific obligation or by government regulation.
Such investments will only be made if determined to be of comparable quality to
other investments permissible for the Money Reserve Portfolio.
Except as otherwise provided above with respect to investment in Eurodollar
or Yankeedollar obligations, the Money Reserve Portfolio may not invest in any
security issued by a commercial bank or a savings and loan association unless
the bank or association is organized and operating in the United States, has
total assets of at least one billion dollars and has its deposits insured by the
Federal Deposit Insurance Corporation.
Short-Term Debt Instruments. The Money Reserve Portfolio may invest in
commercial paper (including variable amount master demand notes), which refers
to short-term, unsecured promissory notes issued by U.S. or foreign
corporations, trusts or partnerships to finance short-term credit needs.
Investments in foreign entities in general involve the same risks as those
described in "INVESTMENT RESTRICTIONS--Portfolio Strategies--Investment
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in Eurodollar and Yankeedollar Obligations" in the Statement of Additional
Information. Commercial paper is usually sold on a discount basis and has a
maturity at the time of issuance not exceeding nine months. Variable amount
master demand notes are demand obligations that permit the investment of
fluctuating amounts at varying market rates of interest pursuant to arrangements
between the issuer and a commercial bank acting as agent for the payees of such
notes, whereby both parties have the right to vary the amount of the outstanding
indebtedness on the notes. Because variable amount master notes are direct
lending arrangements between the lender and borrower, it is not generally
contemplated that such instruments will be traded and there is no secondary
market for the notes. Typically, agreements relating to such notes provide that
the lender may not sell or otherwise transfer the note without the borrower's
consent. Such notes provide that the interest rate on the amount outstanding is
adjusted periodically, typically on a daily basis, in accordance with a stated
short-term interest rate benchmark. Since the interest rate of a variable amount
master note is adjusted no less often than every 60 days and since repayment of
the note may be demanded at any time, the Investment Adviser values such a note
in accordance with the amortized cost basis described under "Determination of
Net Asset Value" in the Statement of Additional Information.
The Money Reserve Portfolio may also invest in non-convertible debt
securities (e.g., bonds and debentures) with no more than 397 days (13 months)
remaining to maturity at date of settlement. Debt securities with a remaining
maturity of less than one year tend to become extremely liquid and are traded as
money market securities.
Repurchase Agreements. The Money Reserve, Intermediate Government Bond,
Multiple Strategy and Balanced Portfolios may invest in securities subject to
repurchase agreements with any member bank of the Federal Reserve System or
primary dealer in U.S. Government securities. A repurchase agreement is an
instrument under which the purchaser (i.e., the Portfolio) acquires ownership of
the obligation (debt security) and the seller agrees, at the time of the sale,
to repurchase the obligation at a mutually agreed upon time and price, thereby
determining the yield during the purchaser's holding period. This results in a
fixed rate of return insulated from market fluctuations during such period. The
underlying securities will only consist of U.S. Government or government agency
securities, certificates of deposit, commercial paper or bankers' acceptances
except that the underlying securities for the Intermediate Government Bond
Portfolio will only consist of U.S. Government or government agency securities.
Repurchase agreements usually are for short periods, such as under one week.
Repurchase agreements are considered to be collateralized loans by the Portfolio
under the Investment Company Act of 1940, and each Portfolio will require the
seller to provide additional collateral if the market value of the securities
falls below the repurchase price any time during the term of the repurchase
agreement. If a repurchase agreement is construed to be a collateralized loan,
the underlying securities will not be considered to be owned by the Portfolio
but only to constitute collateral for the seller's obligation to pay the
repurchase price, and, in the event of a default by the seller because of
bankruptcy or otherwise, the Portfolio may suffer time delays and incur costs or
losses in connection with the disposition of the collateral. Repurchase
agreements will be entered into with primary dealers for periods not to exceed
30 days.
Reverse Repurchase Agreements. The Money Reserve, Multiple Strategy and
Balanced Portfolios may enter into reverse repurchase agreements, which involve
the sale of money market securities held by the Money Reserve Portfolio, the
Multiple Strategy Portfolio or the Balanced Portfolio, as the case may be, with
an agreement to repurchase the securities at an agreed upon price, date and
interest payment. The Money Reserve Portfolio, the Multiple Strategy Portfolio
or the Balanced Portfolio, as the case may be, will use the proceeds of the
reverse repurchase agreements to purchase other money market securities either
maturing, or under an agreement to resell, at a date simultaneous with or prior
to the expiration of the reverse repurchase agreement. The Money Reserve
Portfolio, the Multiple Strategy Portfolio or the Balanced Portfolio, as the
case may be, will utilize reverse repurchase agreements when the interest income
to be earned from the investment of the proceeds of the transaction is greater
than the interest expense of the reverse repurchase transaction. A separate
account of each Portfolio will be established with the Custodian consisting of
cash or U.S. Government securities having a market value at all times at least
equal in value to the proceeds received on any sale subject to repurchase plus
accrued interest.
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APPENDIX B
DESCRIPTION OF
CORPORATE BOND RATINGS
RATINGS OF CORPORATE BONDS
Description of Corporate Bond Ratings of Moody's Investors Service, Inc.:
Aaa--Bonds rated Aaa are judged to be of the best quality. They carry the
smallest degree of investment risk and are generally referred to as "gilt-edge".
Interest payments are protected by a large or by an exceptionally stable margin
and principal is secure. While the various protective elements are likely to
change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
Aa--Bonds rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as high grade
bonds. They are rated lower than the best bonds because margins of protection
may not be as large as in Aaa securities or fluctuation of protective elements
may be of greater amplitude or there may be other elements present which make
the long-term risks appear somewhat larger than in Aaa securities.
A--Bonds rated A possess many favorable investment attributes and are to be
considered as upper medium-grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment sometime in the future.
Baa--Bonds rated Baa are considered medium-grade obligations, i.e., they
are neither highly protected nor poorly secured. Interest payments and principal
security appear adequate for the present but certain protective elements may be
lacking or may be characteristically unreliable over any great length of time.
Such bonds lack outstanding investment characteristics and in fact have
speculative characteristics as well.
Ba--Bonds rated Ba are judged to have speculative elements; their future
cannot be considered as well-assured. Often the protection of interest and
principal payments may be very moderate and thereby not well-safeguarded during
both good and bad times over the future. Uncertainty of position characterizes
bonds in this class.
B--Bonds rated B generally lack characteristics of a desirable investment.
Assurance of interest and principal payments or of maintenance of other terms of
the contract over any long period of time may be small.
Caa--Bonds rated Caa are of poor standing. Such issues may be in default or
there may be present elements of danger with respect to principal or interest.
Ca--Bonds rated Ca represent obligations which are speculative in a high
degree. Such issues are often in default or have other market shortcomings.
Description of Corporate Bond Ratings of Standard & Poor's Corporation:
AAA--This is the highest rating assigned by Standard & Poor's to a debt
obligation and indicates an extremely strong capacity to pay principal and
interest.
AA--Bonds rated AA also qualify as high-quality debt obligations. Capacity
to pay principal and interest is very strong, and in the majority of instances
they differ from AAA issues only in small degree.
A--Bonds rated A have a strong capacity to pay principal and interest,
although they are somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions.
BBB--Bonds rated BBB are regarded as having an adequate capacity to pay
principal and interest. Whereas they normally exhibit protection parameters,
adverse economic conditions or changing circumstances are more likely to lead to
a weakened capacity to pay principal and interest for bonds in this category
than for bonds in the A category.
BB--B--CCC--CC--Bonds rated BB, B, CCC and CC are regarded, on balance, as
predominantly speculative with respect to the issuer's capacity to pay interest
and repay principal in accordance with the terms of the obligations. BB
indicates the lowest degree of speculation and CC the highest degree of
speculation. While such bonds will likely have some quality and protective
characteristics, these are outweighed by large uncertainties or major risk
exposures to adverse conditions.
NR--Not rated by the indicated rating agency.
Plus (+) or Minus (-): The ratings from "AA" to "BB" may be modified by the
addition of a plus or minus sign to show relative standing within the major
rating categories.
36
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DISTRIBUTOR
Merrill Lynch Funds Distributor, Inc.
Box 9011
Princeton, New Jersey 08540-9011
INVESTMENT ADVISER
Merrill Lynch Asset Management
Box 9011
Princeton, New Jersey 08540-9011
CUSTODIAN
The Bank of New York
1 Wall Street
New York, New York 10286
TRANSFER AND DIVIDEND DISBURSING AGENT
Financial Data Services, Inc.
P.O. Box 45289
Jacksonville, Florida 32232-5289
LEGAL COUNSEL
Rogers & Wells
200 Park Avenue
New York, New York 10166
INDEPENDENT AUDITORS
Deloitte & Touche
117 Campus Drive
Princeton, New Jersey 08540
37
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
APRIL 29, 1994
MERRILL LYNCH SERIES FUND, INC.
BOX 9011, PRINCETON, NEW JERSEY 08540-9011 . (609) 282-2800
Merrill Lynch Series Fund, Inc. (the "Fund") is an open-end management
investment company which has a wide range of investment objectives among its ten
separate Portfolios: Money Reserve Portfolio, Intermediate Government Bond
Portfolio, Long Term Corporate Bond Portfolio, High Yield Portfolio, Capital
Stock Portfolio, Growth Stock Portfolio, Multiple Strategy Portfolio, Natural
Resources Portfolio, Global Strategy Portfolio and Balanced Portfolio. Each
Portfolio is in effect a separate fund issuing its own shares.
The shares of the Portfolios will be sold only to separate accounts (the
"Separate Accounts") of the Merrill Lynch Insurance Companies, as defined below,
and Monarch Life Insurance Company's Variable Account A (collectively, the
"Accounts") to fund benefits under Variable Life Insurance Policies (the
"Policies") issued by Merrill Lynch Life Insurance Company and ML Life Insurance
Company of New York, indirect wholly owned subsidiaries of Merrill Lynch & Co.,
Inc. (collectively, the "Merrill Lynch Insurance Companies") and Monarch Life
Insurance Company ("Monarch" and, together with the Merrill Lynch Insurance
Companies, the "Insurance Companies"). The Accounts invest in shares of the Fund
in accordance with allocation instructions received from Policyowners. Such
allocation rights are further described in the accompanying Prospectus for the
Policies. The Insurance Companies redeem shares to the extent necessary to
provide benefits under the Policies.
------------------------
This Statement of Additional Information of the Fund is not a prospectus
and should be read in conjunction with the Prospectus of the Fund (the
"Prospectus") dated April 29, 1994, which has been filed with the Securities and
Exchange Commission and is available upon oral or written request without
charge. Copies of the Prospectus can be obtained by calling or by writing the
Fund at the above telephone number or address. This Statement of Additional
Information has been incorporated by reference into the Prospectus.
------------------------
MERRILL LYNCH ASSET MANAGEMENT--INVESTMENT ADVISER
MERRILL LYNCH FUNDS DISTRIBUTOR, INC.--DISTRIBUTOR
------------------------
TABLE OF CONTENTS
<TABLE> <CAPTION>
PAGE
----------
<S> <C>
Investment Objectives and Policies.................................................... 2
Investment Restrictions............................................................... 2
Management of the Fund................................................................ 10
Investment Advisory Arrangements...................................................... 11
Determination of Net Asset Value...................................................... 12
Portfolio Transactions and Brokerage.................................................. 13
Redemption of Shares.................................................................. 14
Dividends, Distributions and Taxes.................................................... 15
Distribution Arrangements............................................................. 15
Performance Data...................................................................... 15
Additional Information................................................................ 16
Independent Auditors' Report.......................................................... 17
Financial Statements.................................................................. 19
</TABLE>
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES
The investment objectives of the Money Reserve Portfolio are the
preservation of capital, liquidity and the highest possible current income
consistent with the foregoing objectives by investing in short-term money market
securities. The Intermediate Government Bond Portfolio seeks to attain the
highest possible current income consistent with the protection of capital
afforded by investing in intermediate-term debt securities issued or guaranteed
by the United States Government or its agencies. The investment objective of the
Long Term Corporate Bond Portfolio is to attain as high a level of current
income as is consistent with prudent investment risk, by investing primarily in
fixed-income, high quality corporate bonds. The High Yield Portfolio seeks high
current income consistent with prudent investment management by investing
primarily in fixed-income securities rated in the lower rating categories of the
established rating services. The Capital Stock Portfolio seeks to attain
long-term growth of capital and income, plus moderate current income principally
by investing in common stocks which are considered to be of good or improving
quality or which are thought to be undervalued based on criteria such as
historical price/book value ratios and price/earnings ratios. The investment
objective of the Growth Stock Portfolio is to attain above average long-term
growth of capital by investing primarily in common stocks of aggressive growth
companies that are considered to have special growth potential. The Multiple
Strategy Portfolio seeks a high total investment return consistent with prudent
risk through a fully managed investment policy utilizing equity securities,
primarily common stocks of large-capitalization companies, as well as investment
grade intermediate-and long-term debt securities and money market securities.
The Natural Resources Portfolio seeks to attain long-term growth of capital and
the protection of the purchasing power of shareholders' capital by investing in
equity securities of domestic and foreign companies with substantial natural
resource assets. The investment objective of the Global Strategy Portfolio is
high total investment return by investing primarily in a portfolio of equity and
fixed income securities of U.S. and foreign issuers. The investment objective of
the Balanced Portfolio is to seek a level of current income and a degree of
stability of principal not normally available from an investment solely in
equity securities and the opportunity for capital appreciation greater than that
normally available from an investment solely in debt securities by investing in
a balanced portfolio of debt and equity securities.
Reference is made to "Investment Objectives and Policies of the Portfolios"
on page 13 of the Prospectus for a more complete discussion of the investment
objectives and policies of the Fund.
INVESTMENT RESTRICTIONS
RESTRICTIONS APPLICABLE TO ALL OF THE PORTFOLIOS
The Fund has adopted the following restrictions and policies relating to
the investment of assets of the Portfolios and their activities. These are
fundamental policies and may not be changed without the approval of the holders
of a majority of the outstanding voting shares of each Portfolio affected (which
for this purpose and under the Investment Company Act of 1940 means the lesser
of (i) 67% of the shares represented at a meeting at which more than 50% of the
outstanding shares are represented or (ii) more than 50% of the outstanding
shares). A change in policy affecting only one Portfolio may be effected with
the approval of a majority of the outstanding shares of such Portfolio. The Fund
may not issue senior securities (except to the extent that borrowings under item
(9) below exceeding 5% may be deemed to be senior securities under the
Investment Company Act of 1940) and, subject to the separate restrictions on the
types of securities in which the Money Reserve and Intermediate Government Bond
Portfolios may invest as set forth below, each Portfolio of the Fund may not:
1. Except with respect to the Natural Resources and Global Strategy
Portfolios, (a) invest more than 5% of its total assets (taken at market
value at the time of each investment) in the securities (other than United
States Government or government agency securities) of any one issuer
(including repurchase agreements with any one bank) and (b) purchase more
than either (i) 10% in principal amount of the outstanding debt securities
of an issuer, or (ii) 10% of the outstanding voting securities of an
issuer, except that such restrictions shall not apply to securities issued
or guaranteed by the United States Government or its agencies, bank money
instruments or bank repurchase agreements.
2. Invest more than 25% of its total assets (taken at market value at
the time of each investment) in the securities of issuers primarily engaged
in the same industry (utilities will be divided according to their
services; for example, gas, gas transmission, electric and telephone each
2
<PAGE>
will be considered a separate industry for purposes of this restriction),
except for the Natural Resources Portfolio, which when management
anticipates significant economic, political or financial instability, may,
subject to the diversification requirements of the Internal Revenue Code
relating to qualification under the Code as a regulated investment company,
invest more than 25% of its total assets in gold-related companies.
3. Alone, or together with any other Portfolio or Portfolios, make
investments for the purpose of exercising control over, or management of,
any issuer.
4. Purchase securities of other investment companies, except in
connection with a merger, consolidation, acquisition or reorganization, or
by purchase in the open market of securities of closed-end investment
companies where no underwriter or dealer's commission or profit, other than
customary broker's commission, is involved, and only if immediately
thereafter not more than 10% of such Portfolio's total assets, taken at
market value, would be invested in such securities.
5. Purchase or sell interests in oil, gas or other mineral exploration
or development programs, commodities, commodity contracts or real estate,
except that any Portfolio may pur-chase securities of issuers which invest
or deal in any of the above and the Multiple Strategy, Natural Resources
and Global Strategy Portfolios may engage in transactions in currency,
forward currency contracts, futures contracts and options thereon and the
Natural Resources Portfolio may purchase, sell or otherwise invest or deal
in commodities or commodity contracts. (As a matter of operating policy,
however, the Natural Resources Portfolio at present does not intend to
engage in transactions in commodities or commodity contracts, other than
foreign currency, futures contracts and options on futures.)
6. Purchase any securities on margin (except that the Fund may obtain
such short-term credit as may be necessary for the clearance of purchases
and sales of portfolio securities and the Multiple Strategy, Natural
Resources and Global Strategy Portfolios may make margin payments in
connection with transactions in options, forward currency contracts,
futures contracts and options on futures contracts) or make short sales of
securities or maintain a short position (except that the Multiple Strategy
Portfolio, Natural Resources and Global Strategy Portfolios may maintain
short positions in forward currency contracts, options, futures contracts
and options on futures contracts).
7. Make loans, except as provided in (8) below and except through the
purchase of obligations in private placements (the purchase of
publicly-traded obligations not being considered the making of a loan).
8. Lend its portfolio securities in excess of 33 1/3% of its total
assets, taken at market value at the time of the loan, and provided that
such loan shall be made in accordance with the guidelines set forth under
"Lending of Portfolio Securities" on page 19 of the Prospectus.
9. Borrow amounts in excess of 10% of its total assets, taken at
market value at the time of the borrowing, and then only from banks as a
temporary measure for extraordinary or emergency purposes.
10. Mortgage, pledge, hypothecate or in any manner transfer, as
security for indebtedness, any securities owned or held by such Portfolio
except as may be necessary in connection with borrowings mentioned in (9)
above (and then such mortgaging, pledging or hypothecating may not exceed
10% of such Portfolio's total assets, taken at market value at the time
thereof), and except as may be necessary for the Multiple Strategy
Portfolio, Natural Resources Portfolio or Global Strategy Portfolio in
connection with transactions in options, forward currency contracts,
futures contracts and options on futures contracts. In order to comply with
certain state statutes, each Portfolio, other than the Multiple Strategy
Portfolio, Natural Resources Portfolio or Global Strategy Portfolio, will
not, as a matter of operating policy, mortgage, pledge or hypothecate its
portfolio securities to the extent that at any time the percentage of the
value of pledged securities plus the maximum sales charge will exceed 10%
of the value of such Portfolio's shares at the maximum offering price.
11. Underwrite securities of other issuers except insofar as the Fund
may be deemed an underwriter under the Securities Act of 1933 in selling
portfolio securities.
3
<PAGE>
12. Except for the Multiple Strategy Portfolio, Natural Resources and
Global Strategy Portfolios, write, purchase or sell puts, calls or
combinations thereof, except that the Capital Stock Portfolio and the
Balanced Portfolio may write covered call options.
13. Except with respect to the Capital Stock Portfolio, the Natural
Resources Portfolio, the Global Strategy Portfolio and the Multiple
Strategy Portfolio, invest in securities of foreign issuers if at the time
of acquisition more than 10% of its total assets, and in the case of the
Capital Stock Portfolio 20% of its total assets, taken at market value at
the time of the investment, would be invested in such securities; provided,
however, that up to 25% of the total assets of such Portfolio may be
invested in securities (i) issued, assumed or guaranteed by foreign
governments, or political subdivisions or instrumentalities thereof, (ii)
assumed or guaranteed by domestic issuers, including Eurodollar securities,
or (iii) issued, assumed or guaranteed by foreign issuers having a class of
securities listed for trading on the New York Stock Exchange. (As a matter
of operating policy, however, the Multiple Strategy Portfolio will not
invest in the securities of foreign issuers if at the time of acquisition
more than 25% of its total assets would be invested in such securities. In
addition, the Balanced Portfolio, as a matter of operating policy, does not
intend to invest any portion of its assets in the securities of foreign
issuers.) See "Other Portfolio Strategies -- Foreign Securities" in the
Prospectus. Consistent with the general policy of the Securities and
Exchange Commission, the nationality or domicile of an issuer for
determination of foreign issuer status may be (i) the country under whose
laws the issuer is organized, (ii) the country in which the issuer's
securities are principally traded, or (iii) a country in which the issuer
derives a significant proportion (at least 50 percent) of its revenues or
profits from goods produced or sold, investments made, or services
performed in the country, or in which at least 50% of the assets of the
issuer are situated.
14. Participate on a joint (or a joint and several) basis in any
trading account in securities (but this does not include the "bunching" of
orders for the sale or purchase of portfolio securities with the other
Portfolios or with individually managed accounts advised or sponsored by
the Investment Adviser or any of its affiliates to reduce brokerage
commissions or otherwise to achieve best overall execution).
15. Purchase or retain the securities of any issuer, if those
individual officers and directors of the Fund, Merrill Lynch Asset
Management or any subsidiary thereof each owning beneficially more than 1/2
of 1% of the securities of such issuer, own in the aggregate more than 5%
of the securities of such issuer.
RESTRICTIONS APPLICABLE ONLY TO THE MONEY RESERVE
AND INTERMEDIATE GOVERNMENT BOND PORTFOLIOS
The Money Reserve Portfolio may not invest in any security which is not a
short-term money market security as described under "Investment Objectives and
Policies of the Portfolios--Money Reserve Portfolio" in the Prospectus. The
Intermediate Government Bond Portfolio may not invest in any security which is
not issued or guaranteed by the U.S. Government or one of its agencies or which
has a stated maturity greater than fifteen years from the date of purchase.
SPECIAL CONSIDERATIONS WITH RESPECT TO THE NATURAL RESOURCES PORTFOLIO
In determining compliance by the Natural Resources Portfolio with its
policy on investing in the securities of issuers primarily engaged in the same
industry, management will rely on the industrial classifications contained in
the Standard & Poor's Register of Corporations, Directors and Executives.
PORTFOLIO STRATEGIES
Forward Commitments. Portfolios may purchase U.S. Government securities and
corporate bonds on a forward commitment basis at fixed purchase terms with
periods of up to 45 days or, in the case of the Money Reserve Portfolio, 95 days
between the commitment and settlement dates. The purchase will be recorded on
the date a Portfolio enters into the commitment and the value of the security
will thereafter be reflected in the calculation of the Portfolio's net asset
value. The value of the security on the delivery date may be more or less than
its purchase price. A separate account of the Portfolio will be established with
The Bank of New York, Custodian of the Fund, consisting of cash or liquid, high
grade debt obligations having a market value at all times until the delivery
date at least equal to the amount of the
4
<PAGE>
forward commitment. Although a Portfolio will generally enter into forward
commitments with the intention of acquiring securities for its portfolio, it may
dispose of a commitment prior to settlement if management of the Fund deems it
appropriate to do so. There can, of course, be no assurance that the judgments
upon which these techniques are based will be accurate or that such techniques
when applied will be effective. The Portfolios will enter into forward
commitment arrangements only with respect to securities in which they may
otherwise invest as described under "Investment Objectives and Policies of the
Portfolios" on page 13 of the Prospectus.
Lending of Portfolio Securities. Subject to investment restriction (8)
above, each Portfolio may from time to time loan securities from its portfolio
to brokers, dealers and financial institutions and receive collateral in cash or
securities issued or guaranteed by the United States Government which will be
maintained in amounts equal to at least 100% of the current market value of the
loaned securities at all times while the loan is outstanding. Any cash
collateral will be invested in short-term securities, the income from which will
increase the return to the Portfolio. Such loans, which will not have terms
longer than 30 days, will be terminable at any time. The Portfolio will retain
all rights of beneficial ownership as to the loaned portfolio securities,
including voting rights and rights to interest or other distributions, and will
have the right to regain record ownership of loaned securities to exercise such
beneficial rights. Such loans will be terminable at any time. The Portfolio may
pay reasonable finders', administrative and custodial fees to persons
unaffiliated with the Portfolio in connection with the arranging of such loans.
The dividends, interest, and other distributions received by the Portfolio on
loaned securities may, for tax purposes, be treated as income other than
qualified income for the 90% test discussed under "Dividends, Distributions and
Taxes--Federal Income Taxes." The Fund's Portfolios intend to lend portfolio
securities only to the extent that such activity does not jeopardize the Fund's
qualification as a regulated investment company under Subchapter M of the Code.
Investment in Eurodollar and Yankeedollar Obligations. As is discussed in
the Prospectus, the Money Reserve Portfolio may invest in U.S.
dollar-denominated obligations issued by foreign banks or branches or
subsidiaries of U.S. or foreign banks ("Eurodollar" obligations) or U.S.
branches or subsidiaries of foreign banks ("Yankeedollar" obligations).
Investment in Eurodollar and Yankeedollar obligations may involve different
risks from the risks of investing in obligations of U.S. banks. See "Other
Portfolio Strategies--Foreign Securities" in the Prospectus. Such risks include
adverse political and economic developments, the possible imposition of
withholding taxes on interest income payable on such obligations, the possible
seizure or nationalization of foreign deposits and the possible establishment of
exchange controls or other foreign governmental laws or restrictions which might
adversely affect the payment of principal and interest. Generally the issuers of
such obligations are subject to fewer U.S. regulatory requirements than are
applicable to U.S. banks. Foreign branches or subsidiaries of U.S. banks may be
subject to less stringent reserve requirements than U.S. banks. U.S. branches or
subsidiaries of foreign banks are subject to the reserve requirements of the
state in which they are located. There may be less publicly available
information about a U.S. branch or subsidiary of a foreign bank than about a
U.S. bank, and such branches or subsidiaries may not be subject to the same
accounting, auditing and financial record keeping standards and requirements as
U.S. banks. Evidence of ownership of Eurodollar obligations may be held outside
of the United States, and the Money Reserve Portfolio may be subject to the
risks associated with the holding of such property overseas. Eurodollar
obligations of the Money Reserve Portfolio held overseas will be held by foreign
branches of the Custodian for the Money Reserve Portfolio or by other U.S. or
foreign banks under subcustodian arrangements complying with the requirements of
the Investment Company Act of 1940.
The Investment Adviser will consider the above factors in making
investments in Eurodollar and Yankeedollar obligations and will not knowingly
purchase obligations which, at the time of purchase, are subject to exchange
controls or withholding taxes. Generally, the Money Reserve Portfolio will limit
its Eurodollar and Yankeedollar investments to obligations of banks organized in
Canada, France, Germany, Japan, the Netherlands, Switzerland, the United Kingdom
and other western industrialized nations.
Restricted Securities. From time to time the High Yield Portfolio may
invest up to 10% of its assets in securities the disposition of which is subject
to legal restrictions, such as restrictions imposed by the Securities Act of
1933 on the resale of securities acquired in private placements. If registration
of such securities under the Securities Act is required, such registration
5
<PAGE>
may not be readily accomplished, and if such securities may be resold without
registration, such resale may be permissible only in limited quantities. In
either event, the Portfolio may not be able to sell its restricted securities at
a time which, in the judgment of the Investment Adviser, would be most
opportune.
Standby Commitment Agreements. The High Yield Portfolio may from time to
time enter into standby commitment agreements. Such agreements commit the
Portfolio, for a stated period of time, to purchase a stated amount of a fixed
income security which may be issued and sold to the Portfolio at the option of
the issuer. The price and coupon of the security is fixed at the time of the
commitment. At the time of entering into the agreement the Portfolio is paid a
commitment fee, regardless of whether or not the security is ultimately issued,
which is typically approximately 0.5% of the aggregate purchase price of the
security which the Portfolio has committed to purchase. The Portfolio will enter
into such agreements only for the purpose of investing in the security
underlying the commitment at a yield and price which is considered advantageous
to the Portfolio. The Portfolio will not enter into a standby commitment with a
remaining term in excess of 45 days and will limit its investment in such
commitments so that the aggregate purchase price of the securities subject to
such commitments, together with the value of the portfolio securities subject to
legal restrictions on resale, will not exceed 10% of its assets taken at the
time of acquisition of such commitment or security. The Portfolio will at all
times maintain a segregated account with its custodian of cash or liquid,
high-grade debt obligations in an amount equal to the purchase price of the
securities underlying the commitment.
There can be no assurance that the securities subject to a standby
commitment will be issued, and the value of the security, if issued, on the
delivery date may be more or less than its purchase price. Since the issuance of
the security underlying the commitment is at the option of the issuer, the
Portfolio may bear the risk of a decline in the value of such security and may
not benefit from an appreciation in the value of the security during the
commitment period.
The purchase of a security subject to a standby commitment agreement and the
related commitment fee will be recorded on the date on which the security can
reasonably be expected to be issued and the value of the security will
thereafter be reflected in the calculation of the Portfolio's net asset value.
If the security is issued, the cost basis of the security will be adjusted by
the amount of the commitment fee. In the event the security is not issued, the
commitment fee will be recorded as income on the expiration date of the standby
commitment.
Asset-Based Securities. As described in the Prospectus, the Natural
Resources Portfolio may invest in debt securities, preferred stocks or
convertible securities, the principal amount, redemption terms or conversion
terms of which are related to the market price of some natural resource asset
such as gold bullion. These securities are referred to as "asset-based
securities."
The Portfolio will not acquire asset-based securities for which no
established secondary trading market exists if at the time of acquisition more
than 5% of its total assets are invested in securities which are not readily
marketable. The Portfolio may invest in asset-based securities without limit
when it has the option to put such securities to the issuer or a stand-by bank
or broker and receive the principal amount or redemption price thereof less
transaction costs on no more than seven days notice or when the Portfolio has
the right to convert such securities into a readily marketable security in which
it could otherwise invest upon not less than seven days notice.
The asset-based securities in which the Portfolio may invest may bear
interest or pay preferred dividends at below market (or even relatively nominal)
rates. The Portfolio's holdings of such securities therefore may not generate
appreciable current income, and the return from such securities primarily will
be from any profit on the sale, maturity or conversion thereof at a time when
the price of the related asset is higher than it was when the Portfolio
purchased such securities.
Writing of Covered Call Options. Each of the Capital Stock, Multiple
Strategy, Natural Resources, Global Strategy and Balanced Portfolios may from
time to time write covered call options on its portfolio securities. A covered
call option is an option where the Portfolio owns the underlying securities. By
writing a covered call option, the Portfolio, in return for the premium income
realized from the sale of the option, may give up the opportunity to profit from
a price increase in the underlying security above the option exercise price. In
addition, the Portfolio will not be able to sell the underlying security until
the option expires or is exercised or the Portfolio effects a closing purchase
transaction as described below. If the option expires unexercised, or is closed
out at a profit, the Portfolio realizes a gain (short-term capital gain for
federal income tax purposes) on the option which may offset all or a part of a
decline in the market price of the underlying security during the option period.
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Exchange-traded options are issued by The Options Clearing Corporation (the
"Clearing Corporation"). The option gives the purchaser of an option the right
to buy, and obligates the writer (seller) to sell, the underlying security at
the exercise price during the option period. The maximum term of an option is
nine months. For writing an option, the Portfolios receive a premium, which is
the price of such option on the Exchange on which it is traded. The exercise
price of the option may be below, equal to or above the current market value of
the underlying security at the time the option was written.
A Portfolio may terminate its obligation prior to the expiration date of
the option by executing a closing purchase transaction which is effected by
purchasing on an exchange an option of the same series (i.e., same underlying
security, exercise price and expiration date) as the option previously written.
The cost of such closing purchase transaction may be greater than the premium
received upon the original option, in which case a Portfolio will have incurred
a loss in the transaction. An option may be closed out only on an exchange which
provides a secondary market for an option of the same series and there is no
assurance that a secondary market will exist for any particular option at any
specific time. In the event the Portfolio is unable to effect a closing purchase
transaction, it will not be able to sell the underlying security until the
option expires or the underlying security is delivered upon exercise, with the
result that the Portfolio will be subject to the risk of market decline in the
underlying security during such period. The Portfolio will write an
exchange-traded option on a particular security only if management believes that
a secondary market will exist on an exchange for options of the same series
which will permit the Portfolio to make a closing purchase transaction in order
to close out its position.
Writing options involves risks of possible unforeseen events which can be
disruptive to the option markets or could result in the institution of certain
procedures including restriction of certain types of orders.
Purchase of Put Options. The Global Strategy, Multiple Strategy and Natural
Resources Portfolios may purchase put options in connection with their hedging
activities. By buying a put, a Portfolio has the right to sell the underlying
securities at the exercise price, thus limiting the Portfolio's risk of loss
through a decline in the market value of the security until the put expires.
Stock Index Options. The Natural Resources Portfolio and Multiple Strategy
Portfolio each may write exchange-traded call options and may purchase put
options on stock indexes for the purpose of hedging the Portfolio's investment
portfolio. As stated in the Prospectus, the effectiveness of this hedging
technique will depend upon the extent to which price movements in the portion of
the Portfolio's investment portfolio being hedged correlate with price movements
of the stock index selected. Because the value of an index option depends upon
movements in the level of the index rather than the price of a particular stock,
whether the Portfolio will realize a gain or loss on the purchase or sale of an
option on an index depends upon movements in the level of prices in the stock
market generally or in an industry or market segment rather than movements in
the price of a particular stock. Accordingly, successful use by the Portfolio of
options on indexes will be subject to the Investment Adviser's ability to
correctly predict movements in the direction of the stock market generally or of
a particular industry or market segment. This requires different skills and
techniques than predicting changes in the price of individual stocks.
Stock Index Futures. The Multiple Strategy Portfolio and Natural Resources
Portfolio will only engage in transactions in stock index futures to hedge its
investment portfolio. The Portfolios may sell stock index futures contracts in
anticipation of or during a market decline in an endeavor to offset the decrease
in market value of the Portfolio's securities portfolio that would otherwise
result from a market decline. When a Portfolio is not fully invested in the
securities market and anticipates a significant market advance, it may purchase
stock index futures in order to gain rapid market exposure that may in part or
entirely offset increases in the cost of the securities that the Portfolio
intends to purchase. No purchase of stock index futures will be made, however,
unless the Portfolio intends to purchase securities in approximately the amount
of the market value of the stocks represented by the index futures purchased and
the Portfolio has identified the cash or cash equivalents needed to make such a
purchase. An amount of cash and cash equivalents will be deposited in a
segregated account with the Fund's Custodian so that the amount so segregated,
plus the initial and variation margin held
7
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in the account of its broker, will collateralize the Portfolio's position in
stock index futures.
Forward Foreign Exchange Transactions. The Multiple Strategy, Natural
Resources and the Global Strategy Portfolios may engage in forward foreign
exchange transactions. Generally, the foreign exchange transactions of a
Portfolio will be conducted on a spot, i.e., cash, basis at the spot rate for
purchasing or selling currency prevailing in the foreign exchange market. This
rate under normal market conditions differs from the prevailing exchange rate in
an amount generally less than one-tenth of one percent due to the costs of
converting from one currency to another. However, the Portfolios have authority
to deal in forward foreign exchange between currencies of the different
countries in whose securities they will invest as a hedge against possible
variations in the foreign exchange rates between these currencies. This is
accomplished through contractual agreements to purchase or sell a specified
currency at a specified future date and price set at the time of the contract. A
Portfolio's dealings in forward foreign exchange will be limited to hedging
involving either specific transactions or portfolio positions. Transaction
hedging is the purchase or sale of forward foreign currency with respect to
specific receivables or payables of a Portfolio accruing in connection with the
purchase and sale of its portfolio securities, the sale and redemption of shares
of a Portfolio or the payment of dividends and distributions by a Portfolio.
Position hedging is the sale of forward foreign currency with respect to
portfolio security positions denominated or quoted in such foreign currency. The
Portfolios may not speculate in forward foreign exchange. A Portfolio may not
hedge a position with respect to the currency of a particular country to an
extent greater than the aggregate market value (at the time of making such sale)
of the securities held in its portfolio denominated or quoted in that particular
foreign currency. If a Portfolio enters into a position hedging transaction, the
Fund's Custodian will place cash or liquid securities in a separate account of
the Portfolio in an amount equal to the value of the Portfolio's total assets
committed to the consummation of such forward contract. If the value of the
securities placed in the separate account declines, additional cash or
securities will be placed in the account so that the value of the account will
equal the amount of the Portfolio's commitment with respect to such contract. A
Portfolio may not enter into a forward contract with a term of more than one
year.
Hedging against a decline in the value of a currency does not eliminate
fluctuations in the prices of portfolio securities or prevent losses if the
prices of such securities decline. Such transactions also preclude the
opportunity for gain if the value of the hedged currency should rise. Moreover,
it may not be possible for a Portfolio to hedge against a devaluation that is so
generally anticipated that the Portfolio is not able to contract to sell the
currency at a price above the devaluation level it anticipates. The cost to a
Portfolio of engaging in foreign currency transactions varies with such factors
as the currency involved, the length of the contract period and the market
conditions then prevailing. Since transactions in foreign currency exchange are
usually conducted on a principal basis, no fees or commissions are involved.
Call Options on Futures Contracts. A call option on a futures contract
provides the purchaser with the right, but not the obligation, to enter into a
"long" position in the underlying futures contract at any time up to the
expiration of the option. The purchase of an option on a futures contract
presents more limited risk than purchasing the underlying futures contract.
Depending on the price of the option compared to either the futures contract
upon which it is based, or the underlying securities or currency, exercise of
the option may or may not be less risky than ownership of the futures contract
or underlying securities or currency. Like the purchase of a futures contract, a
Portfolio will purchase a call option on a futures contract to hedge against the
appreciation of equity securities resulting from a market advance or
appreciation of securities denominated in foreign currencies resulting from a
strengthening of the currency which the Portfolios intend to purchase.
The writing of a call option on a futures contract may constitute a partial
hedge against a decline in the equities market or drop in the value of a foreign
currency, if the futures price at expiration is below the exercise price of the
option. In such event, a Portfolio will retain the full amount of the option
premium, which provides a partial hedge against any decline that may have
occurred in the Portfolio's equity security investments or investments
denominated in foreign currencies. Conversely, if the futures price is above the
exercise price at any point prior to expiration, the option may be exercised and
the Portfolio would be required to enter into the underlying futures contract at
an unfavorable price.
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<PAGE>
Put Options on Futures Contracts. A put option on a futures contract
provides the purchaser with the right, but not the obligation, to enter into a
"short" position in the futures contract at any time up to the expiration of the
option. A Portfolio will purchase a put option on a futures contract to hedge
its securities against the risk of a decline in the equities markets or drop in
the value of a foreign currency.
The writing of a put option on a futures contract may constitute a partial
hedge against increasing prices of equity securities or securities denominated
in foreign currencies which a Portfolio intends to purchase, if the futures
price at expiration is higher than the exercise price. In such event, the
Portfolio will retain the full amount of the option premium, which provides a
partial hedge against any increase in the price of the securities which the
Portfolio intends to purchase. Conversely, if the futures price is below the
exercise price at any point prior to expiration, the option may be exercised and
the Portfolio would be required to enter into the underlying futures contract at
an unfavorable price.
Risk Factors in Transactions in Futures and Options Thereon. A Portfolio
may purchase futures contracts or purchase call or write put options thereon to
hedge against a possible increase in the price of securities before the
Portfolio is able to invest its cash in such securities. In such instances, it
is possible that the market may instead decline. If the Portfolio does not then
invest in such securities because of concern as to possible further market
decline or for other reasons, the Portfolio may realize a loss on the futures or
option contract that is not offset by a reduction in the price of securities
purchased.
Because of low initial margin deposits made upon the opening of a futures
position, futures transactions involve substantial leverage. As a result,
relatively small movements in the price of the futures contract can result in
substantial unrealized gains or losses. Because the Portfolios will engage in
the purchase and sale of stock index and currency contracts solely for hedging
purposes, however, any losses incurred in connection therewith should, if the
hedging strategy is successful, be offset in whole or in part by increases in
the value of securities held by the Portfolios or decreases in the price of
securities the Portfolios intend to acquire.
The anticipated offsetting movements between the price of the futures or
option contracts and the hedged security may be distorted due to differences in
the nature of the markets, such as differences in initial and variation margin
requirements, the liquidity of such markets and the participation of speculators
in such markets.
The amount of risk a Portfolio assumes when it purchases an option on a
futures contract is the premium paid for the option plus related transaction
costs. In order to profit from an option purchased, however, it may be necessary
to exercise the option and to liquidate the underlying futures contract, subject
to the risks of the availability of a liquid offset market. In addition to the
correlation risks discussed above, the purchase of an option also entails the
risk that changes in the value of the underlying futures contract will not be
fully reflected in the value of the option purchased. The writer of an option on
a futures contract is subject to the risks of commodity futures trading,
including the requirement of variation margin payments, as well as the
additional risk that movements in the price of the option may not correlate with
movements in the price of the underlying security or futures contract.
The trading of futures contracts and options thereon also is subject to
certain market risks, such as trading halts, suspensions, exchange or clearing
house equipment failures, government intervention, insolvency of a brokerage
firm or clearing corporation or other disruptions of normal trading activity,
which could at times make it difficult or impossible to liquidate existing
positions.
9
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MANAGEMENT OF THE FUND
The directors and executive officers of the Fund and their principal
occupations for at least the last five years and the public companies for which
they serve as directors are set forth below. Unless otherwise noted, the address
of each executive officer and director is Box 9011, Princeton, New Jersey
08540-9011.
TERRY K. GLENN--President and Director(1)(2)--Director of Merrill Lynch
Investment Management, Inc., which is doing business as Merrill Lynch Asset
Management (the "Investment Adviser") and its wholly-owned subsidiary, Fund
Asset Management, L.P. ("FAM") since 1991 and Executive Vice President since
1983; President and Director of Merrill Lynch Funds Distributor, Inc. (the
"Distributor") since 1986; President of Princeton Administrators, Inc. since
1988 and Director of Financial Data Services, Inc. since 1985.
JACK B. SUNDERLAND--Director(2)--Box 1177, Scarsdale, New York 10583.
President and Director of American Independent Oil Company, Inc. (energy
company) since 1987; Chairman of Murexco Petroleum, Inc. (energy company) from
1981 to 1988; Member of Council on Foreign Relations since 1971.
STEPHEN B. SWENSRUD--Director(2)--24 Federal Street, Boston, Massachusetts
02110. Principal of Fernwood Associates (financial consultants); Director,
Nautilus Fund, Inc.; Hitchiner Manufacturing Company.
J. THOMAS TOUCHTON--Director(2)--Suite 3405, One Tampa City Center, Tampa,
Florida 33602. Managing Partner of the Witt-Touchton Company and its predecessor
The Witt Co. (private investment partnership) since 1972; Trustee Emeritus of
Washington and Lee University; Director of TECO Energy, Inc. (electric utility
holding company).
BERNARD J. DURNIN--Senior Vice President(1)(2)--Senior Vice President of
the Investment Adviser since 1981.
N. JOHN HEWITT--Senior Vice President(1)(2)--Senior Vice President of the
Investment Adviser since 1980.
DONALD C. BURKE--Vice President(2)--Vice President of MLAM since 1990 and
an accountant with Deloitte & Touche from 1982 to 1990.
VINCENT T. LATHBURY, III--Vice President(1)(2)--Vice President of the
Investment Adviser and FAM and Portfolio Manager of the Investment Adviser and
FAM since 1982.
JAY C. HARBECK--Vice President(1)(2)--Vice President of FAMI and the
Investment Adviser since 1979.
ALDONA SCHWARTZ--Vice President(1)(2)-- Vice President of the Investment
Adviser since 1991; Employed by the Investment Adviser since 1986.
JOEL HEYMSFELD--Vice President(1)(2)--Vice President of the Investment
Adviser since 1978.
DENNIS B. CUMMINGS--Vice President(1)(2)-- Vice President of the Investment
Adviser since 1978.
JOSEPH KENNEY--Vice President(1)(2)--Vice President of the Investment
Adviser since 1976.
LAWRENCE R. FULLER--Vice President(1)(2)-- Vice President of the Investment
Adviser since 1992; Senior Vice President of Benefit Capital Management
Corporation from 1981 to 1992.
JACQUELINE ROGERS--Vice President--(1)(2) Vice President of the Investment
Adviser since 1985.
PETER LEHMAN--Vice President--Vice President of the Investment Adviser
since 1994; Employed by the Investment Adviser since 1992. Portfolio manager of
the Prudential Insurance Company of America from 1985 to 1991.
ALEX BOUZAKIS--Vice President(1)--Vice President of the Investment Adviser
since 1984.
GERALD M. RICHARD--Treasurer(1)(2)--Senior Vice President and Treasurer of
the Investment Adviser since 1984; Senior Vice President and Treasurer of FAM
since 1984; Treasurer of the Distributor since 1984 and Vice President since
1981.
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<PAGE>
MICHAEL J. HENNEWINKEL--Secretary(1)(2)-- Vice President of the Investment
Adviser since 1985; attorney associated with the Investment Adviser and FAM
since 1982.
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(1) Interested person, as defined in the Investment Company Act of 1940, of the
Fund.
(2) Mr. Glenn is a director or trustee and officer, Messrs. Sunderland, Swensrud
and Touchton are directors and Messrs. Burke, Cummings, Durnin, Fuller,
Hewitt, Harbeck, Hennewinkel, Heymsfeld, Lathbury, Lehman, Kenney and
Richard, and Ms. Rogers and Schwartz are officers of certain other
investment companies for which the Investment Adviser or its subsidiary, FAM
acts as investment adviser (see "Investment Advisory Arrangements").
The officers of the Fund owned on February 28, 1994 in the aggregate, less
than 1% of the outstanding Common Stock of Merrill Lynch & Co., Inc. On February
28, 1994, the officers and directors of the owned an aggregatge of less than 1/4
of 1% of its outstanding shares. The Fund has an Audit Committee consisting of
all of the directors of the Fund who are not interested persons of the Fund.
Pursuant to the terms of the Investment Advisory Agreement, the Investment
Adviser pays all compensation of officers and employees of the Fund as well as
the fees of all directors of the Fund who are affiliated persons of Merrill
Lynch & Co., Inc. or its subsidiaries. The Fund pays each non-interested
director an annual fee of $5,000 plus $500 per quarterly meeting attended and an
annual fee of $1,000 for membership on the Audit Committee, and pays all of the
actual out-of-pocket expenses of such directors relating to attendance at
meetings. For the year ended December 31, 1993, such fees and expenses
aggregated $23,995.
INVESTMENT ADVISORY ARRANGEMENTS
The Fund has entered into an Investment Advisory Agreement with the
Investment Adviser. The Investment Adviser is a wholly-owned subsidiary of ML
Group, Inc., a wholly-owned subsidiary of Merrill Lynch & Co., Inc. The
principal business address of the Investment Adviser is Box 9011, Princeton, New
Jersey 08540-9011.
The principal executive officers and directors of the Investment Adviser
are Arthur Zeikel, President and Director and Chief Investment Officer; Terry K.
Glenn, Director and Executive Vice President; Robert W. Crook, Senior Vice
President; Bernard J. Durnin, Senior Vice President; Vincent R. Giordano, Senior
Vice President; Norman R. Harvey, Senior Vice President; Philip L. Kirstein,
Director, Senior Vice President, General Counsel and Secretary; Ronald M. Kloss,
Senior Vice President and Controller; Joseph T. Monagle, Senior Vice President;
Gerald M. Richard, Senior Vice President and Treasurer; Stephen M.M. Miller,
Senior Vice President; Richard L. Rufener, Senior Vice President; Ronald L.
Wellburn, Senior Vice President and Anthony Wiseman, Senior Vice President.
Securities held by any Portfolio may also be held by other funds for which
the Investment Adviser or FAM acts as an adviser or by investment advisory
clients of the Investment Adviser. Because of different investment objectives or
other factors, a particular security may be bought for one or more clients when
one or more clients are selling the same security. If purchases or sales of
securities for any Portfolio or other funds for which the Investment Adviser or
FAM acts as investment adviser or for their advisory clients arise for
consideration at or about the same time, transactions in such securities will be
made, insofar as feasible, for the respective funds and clients in a manner
deemed equitable to all. To the extent that transactions on behalf of more than
one client of the Investment Adviser or FAM during the same period may increase
the demand for securities being purchased or the supply of securities being
sold, there may be an adverse effect on price.
Advisory Fee. The Investment Advisory Agreement provides that as
compensation for its services to the Fund, the Investment Adviser receives
monthly compensation with respect to such Portfolios according to the following
schedule:
AGGREGATE OF AVERAGE DAILY NET
ASSETS OF THE TEN COMBINED
PORTFOLIOS ADVISORY FEE
Not exceeding $250 million................... 0.50%
In excess of $250 million but
not exceeding $300 million................... 0.45%
In excess of $300 million but
not exceeding $400 million................... 0.40%
In excess of $400 million but
not exceeding $800 million................... 0.35%
In excess of $800 million.................... 0.30%
The advisory fee rates for the Portfolios are subject to reduction to the
extent that the aggregate average daily net assets of the Portfolios exceed $250
million. The reductions are applicable to each Portfolio regardless of size on a
"uniform percentage" basis.
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<PAGE>
Determination of the portion of the net assets of each such Portfolio to which a
reduced rate is applicable is made by multiplying the net assets of that
Portfolio by the "uniform percentage", which is derived by dividing the amount
of the portion of the aggregate assets of all Portfolios to which such rate
applies by the total amount of such aggregate assets.
The Investment Advisory Agreement provides that the Investment Adviser will
reimburse the Fund if and to the extent that in any year the aggregate ordinary
operating expenses of any Portfolio exceed the most restrictive expense
limitations then in effect under any state securities law or the regulations
thereunder. Under the most restrictive state regulations presently in effect,
the Investment Adviser is required to reimburse each Portfolio (up to the amount
of the advisory fee received by it from the Fund with respect to such Portfolio)
to the extent that such Portfolio's aggregate ordinary operating expenses
(excluding interest, taxes, brokerage fees and commissions and extraordinary
charges such as litigation costs) exceed in any fiscal year 2.5% of the
Portfolio's first $30,000,000 of average daily net assets and 2.0% of average
daily net assets in excess of $30,000,000 but less than $100,000,000, and 1.5%
of its average daily net assets in excess of $100,000,000 for such year.
For the fiscal years ended December 31, 1993, 1992 and 1991, the advisory
fees paid by the Fund to the Investment Adviser totaled $9,252,881, $8,947,953
and $8,769,669, respectively.
The Investment Advisory Agreement with respect to the Fund's Portfolios was
approved by the Fund's Board of Directors, including a majority of the Directors
who are not interested persons of the Investment Adviser, on May 7, 1993. The
Agreement was last approved by the Fund's shareholders in accordance with
instructions from Policyowners at the Annual Meeting of Shareholders held on
January 31, 1992. The Agreement will continue in effect from year to year if
approved annually (a) by the Board of Directors of the Fund or by a majority of
the outstanding shares of the respective Portfolios, and (b) by a majority of
the Directors who are not parties to such contract or interested persons (as
defined in the Investment Company Act of 1940) of any such party. The Agreement
is not assignable and may be terminated without penalty on 60 days' written
notice at the option of either party or by the vote of the shareholders of the
Fund.
Payment of Expenses. The Investment Advisory Agreement obligates the
Investment Adviser to provide investment advisory services and to pay all
compensation of and furnish office space for officers and employees of the Fund
connected with investment and economic research, trading and investment
management of the Portfolios, as well as the fees of all directors of the Fund
who are affiliated persons of Merrill Lynch & Co., Inc. or any of its
subsidiaries. Each Portfolio will pay all other expenses incurred in its
operation, including a portion of the Fund's general administrative expenses
allocated on the basis of the Portfolio's asset size. Expenses that will be
borne directly by the Portfolios include redemption expenses, expenses of
portfolio transactions, shareholder servicing costs, expenses of registering the
shares under Federal and state securities laws, pricing costs (including the
daily calculation of net asset value), interest, certain taxes, charges of the
Custodian and Transfer Agent and other expenses attributable to a particular
Portfolio. Expenses which will be allocated on the basis of size of the
respective Portfolios include directors' fees, legal expenses, state franchise
taxes, auditing services, costs of printing proxies, stock certificates,
shareholder reports and prospectuses and statements of additional information
(to the extent not paid for by the Distributor), Securities and Exchange
Commission fees, accounting costs and other expenses properly payable by the
Fund and allocable on the basis of size of the respective Portfolios. Accounting
services are provided for the Fund by the Investment Adviser, and the Fund
reimburses the Investment Adviser for its costs in connection with such
services. For the year ended December 31, 1993, the amount of such reimbursement
was $337,017. Depending upon the nature of the lawsuit, litigation costs may be
directly applicable to the Portfolios or allocated on the basis of the size of
the respective Portfolios. The Board of Directors has determined that this is an
appropriate method of allocation of expenses.
DETERMINATION OF NET ASSET VALUE
The net asset value of each Portfolio (other than the Money Reserve
Portfolio) is determined by adding the value of all securities and other assets
in its portfolio, deducting the portfolio's liabilities, dividing by the number
of shares outstanding and rounding the result to the nearest whole cent. The net
asset value of the Money Reserve Portfolio is determined pursuant to the "penny
rounding method" under a rule of the Securities and Exchange Commission
described below by adding the value of all securities and other assets in
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<PAGE>
its portfolio, deducting the portfolio's liabilities, dividing by the number of
shares outstanding and rounding the result to the nearest whole cent.
In accordance with the Securities and Exchange Commission rule applicable
to the valuation of the portfolio securities of the Money Reserve Portfolio and
consistent with its operating policies, the Money Reserve Portfolio will
maintain a dollar-weighted average portfolio maturity of 90 days or less,
purchase instruments having remaining maturities of 397 calendar days (or 762
calendar days in the case of Government Securities) or less only, and invest
only in securities determined by the directors to be of high quality with
minimal credit risks and which meet certain credit standards prescribed by the
rule. In addition, the directors have established procedures designed to
stabilize, to the extent reasonably possible, the Portfolio's price per share as
computed for the purpose of sales and redemptions at $1.00. Deviations of more
than an insignificant amount between the net asset value calculated using market
quotations and that calculated pursuant to the penny rounding method will be
reported to the directors by MLAM. In the event the directors determine that a
deviation exists which may result in material dilution or other unfair results
to investors or existing shareholders, the Portfolio will take such corrective
action as it regards as necessary and appropriate, including the sale of
portfolio instruments prior to maturity to realize capital gains or losses or to
shorten average portfolio maturity; withholding dividends; or establishing a net
asset value per share by using available market quotations.
If in the view of the Board of Directors of the Fund it is inadvisable to
continue the practice of maintaining the net asset value of the Money Reserve
Portfolio at $1.00 per share, the Board of Directors of the Fund reserves the
right to alter the procedure. The Fund will notify the Account of any such
alteration.
Securities held by the Money Reserve Portfolio and the Multiple Strategy
Portfolio with a remaining maturity of 60 days or less are valued on an
amortized cost basis, unless particular circumstances dictate otherwise. Under
this method of valuation, the security is initially valued at cost on the date
of purchase (or in the case of securities purchased with more than 60 days
remaining to maturity, the market value on the 61st day prior to maturity); and
thereafter the Portfolios assume a constant proportionate amortization in value
until maturity of any discount or premium, regardless of the impact of
fluctuating interest rates on the market value of the security. For purposes of
this method of valuation, the maturity of a variable rate certificate of deposit
and variable amount master demand note is deemed to be the next coupon date on
which the interest rate is to be adjusted. If, due to the impairment of the
creditworthiness of the issuer of a security held by a Portfolio or to other
factors with respect to such security, the fair value of such security is not
fairly reflected through the amortized cost method of valuation, such security
will be valued at fair value as determined in good faith by the Board of
Directors. Any assets or liabilities initially expressed in terms of non-U.S.
dollar currencies are translated into U.S. dollars at the prevailing market
rates as quoted by one or more banks or dealers on the day of valuation.
PORTFOLIO TRANSACTIONS AND
BROKERAGE
If the securities in which a particular Portfolio of the Fund invests are
traded primarily in the over-the-counter market, where possible the Portfolio
will deal directly with the dealers who make a market in the securities involved
except in those circumstances where better prices and execution are available
elsewhere. Such dealers usually are acting as principals for their own account.
On occasion, securities may be purchased directly from the issuer. Bonds and
money market securities are generally traded on a net basis and do not normally
involve either brokerage commission or transfer taxes. The cost of executing
portfolio securities transactions of each Fund will primarily consist of
brokerage commissions or underwriter or dealer spreads.
Under the Investment Company Act of 1940, persons affiliated with the Fund
are prohibited from dealing with the Fund as a principal in the purchase and
sale of the Fund's portfolio securities unless an exemptive order allowing such
transactions is obtained from the Securities and Exchange Commission. Since
over-the-counter transactions are usually principal transactions, affiliated
persons of the Fund, including Merrill Lynch Government Securities Inc. ("GSI"),
Merrill Lynch Money Markets Inc. ("MMI") and Merrill Lynch, Pierce, Fenner &
Smith Incorporated ("Merrill Lynch"), may not serve as dealers in connection
with such transactions except pursuant to exemptive orders from the Securities
and Exchange Commission, such as the order described below. However, affiliated
persons of the Fund may serve as its broker in over-the-counter or other
transactions conducted on an agency basis, subject to the Fund's policy of
obtaining best price and execution. The Fund may not purchase securities from
any underwriting syndicate of which Merrill Lynch is a member except in
13
<PAGE>
accordance with rules and regulations under the Investment Company Act of 1940.
The Securities and Exchange Commission has issued an exemptive order
permitting the Fund to conduct principal transactions with respect to the Money
Reserve Portfolio with GSI and MMI in United States Government and government
agency securities, and certain other money market securities, subject to a
number of conditions, including conditions designed to insure that the prices to
the Portfolio available from GSI and MMI are equal to or better than those
available from other sources. GSI and MMI have informed the Fund that they will
in no way, at any time, attempt to influence or control the activities of the
Fund or the Investment Adviser in placing such principal transactions. The
exemptive order allows GSI and MMI to receive a dealer spread on any transaction
with the Fund no greater than their customary dealer spreads for transactions of
the type involved.
Certain court decisions have raised questions as to whether investment
companies should seek to "recapture" brokerage commissions and underwriting and
dealer spreads by effecting their purchases and sales through affiliated
entities. In order to effect such an arrangement, the Fund would be required to
seek an exemption from the Investment Company Act so that it could engage in
principal transactions with affiliates. The Board of Directors has considered
the possibilities of seeking to recapture spreads for the benefit of the Fund
and, after reviewing all factors deemed relevant, has made a determination not
to seek such recapture at this time. The Board will reconsider this matter from
time to time. The Fund will take such steps as may be necessary to effect
recapture, including the filing of applications for exemption under the
Investment Company Act, if the Directors should determine that recapture is in
the best interests of the Fund or otherwise required by developments in the law.
The Investment Adviser has arranged for the Fund's Custodian to receive on
behalf of the Fund any tender offer solicitation fees payable with respect to
portfolio securities of the Fund.
While the Investment Adviser seeks to obtain the most favorable net results
in effecting transactions in the Fund's portfolio securities, dealers who
provide supplemental investment research to the Investment Adviser may receive
orders for transactions by the Fund. Such supplemental research services
ordinarily consist of assessments and analyses of the business or prospects of a
company, industry or economic sector. If, in the judgment of the Investment
Adviser, a particular Portfolio or Portfolios will be benefited by such
supplemental research services, the Investment Adviser is authorized to pay
commissions to brokers furnishing such services which are in excess of
commissions which another broker may charge for the same transaction.
Information so received will be in addition to and not in lieu of the services
required to be performed by the Investment Adviser under the Investment Advisory
Agreement. The expenses of the Investment Adviser will not necessarily be
reduced as a result of the receipt of such supplemental information. In some
cases, the Investment Adviser may use such supplemental research in providing
investment advice to its other investment advisory accounts.
For the year ended December 31, 1993, the Fund paid brokerage commissions
of approximately $3,518,138, of which $271,137 was paid to Merrill Lynch. For
the year ended December 31, 1992, the Fund paid brokerage commissions of
approximately $693,676, of which $359,999 was paid to Merrill Lynch and $604,143
was paid to brokers who furnished services to the Investment Adviser. For the
year ended December 31, 1991, the Fund paid total brokerage commissions of
approximately $2,169,868, of which $161,376 was paid to Merrill Lynch and
$2,008,170 was paid to brokers who furnished services to the Investment Adviser.
PORTFOLIO TURNOVER
Each Portfolio has a different expected rate of portfolio turnover;
however, rate of portfolio turnover will not be a limiting factor when
management of the Fund deems it appropriate to purchase or sell securities for a
Portfolio. Because of the short-term nature of the securities in which the Money
Reserve Portfolio will invest, and because such Portfolio's investments will be
constantly changing in response to market conditions, no portfolio turnover rate
may be accurately predicted for the Money Reserve Portfolio. For the year ended
December 31, 1993, the portfolio turnover rates for the Fund's Portfolios were
as follows: the Intermediate Government Bond Portfolio was 113.61%; the Long
Term Corporate Bond Portfolio was 110.53%; the Capital Stock Portfolio was
100.12%; the Growth Stock Portfolio was 160.29%; the Multiple Strategy Portfolio
was 91.08%; the High Yield Portfolio was 73.01%; the Natural Resources Portfolio
was 65.26%; the Global Strategy Portfolio was 30.53% and the Balanced Portfolio
was 25.38%.
REDEMPTION OF SHARES
The right to redeem shares or to receive payment with respect to any
redemption may only be suspended for any period during which trading on the New
York
14
<PAGE>
Stock Exchange is restricted as determined by the Securities and Exchange
Commission or such Exchange is closed (other than customary weekend and holiday
closings), for any period during which an emergency exists as defined by the
Securities and Exchange Commission as a result of which disposal of portfolio
securities or determination of the net asset value of each Portfolio is not
reasonably practicable, and for such other periods as the Securities and
Exchange Commission may by order permit for the protection of shareholders of
each Portfolio.
DIVIDENDS, DISTRIBUTIONS AND TAXES
DIVIDENDS AND DISTRIBUTIONS
Reference is made to "Dividends, Distributions and Taxes" on page 30 of the
Prospectus.
FEDERAL INCOME TAXES
Under the Internal Revenue Code of 1986, as amended (the "Code"), each
Portfolio of the Fund will be treated as a separate corporation for federal
income tax purposes and, thus, each Portfolio is required to satisfy the
qualification requirements under the Code for treatment as a regulated
investment company. There will be no offsetting of capital gains and losses
among the Portfolios.
Each Portfolio intends to continue to qualify as a regulated investment
company under the Code. Under such provisions, a Portfolio will not be subject
to federal income tax on such part of its net ordinary income and net realized
capital gains which it distributes to shareholders. To qualify for treatment as
a regulated investment company, a Portfolio must, among other things, derive in
each taxable year at least 90% of its gross income from dividends, interest and
gains from the sale or other disposition of securities and derive less than 30%
of its gross income in each taxable year from the gains (without deduction for
losses) from the sale or other disposition of securities and certain options,
futures or forward contracts held for less than three months.
The foregoing is a general and abbreviated summary of the applicable
provisions of the Code and Treasury Regulations presently in effect. For the
complete provisions, reference should be made to the pertinent Code sections and
the Treasury Regulations promulgated thereunder. The Code and these Regulations
are subject to change by legislative or administrative action.
DISTRIBUTION ARRANGEMENTS
The Fund has entered into a distribution agreement (the "Distribution
Agreement") with the Distributor with respect to the sale of the Fund's shares
to the Distributor for resale to the Accounts. Such shares will be sold at their
respective net asset values and therefore will involve no sales charge. The
Distributor is a wholly-owned subsidiary of the Investment Adviser. The
continuance of the Distribution Agreement through May 31, 1994 was approved by
the Board of Directors, including a majority of the directors who are not
interested persons of the Fund, on May 7, 1993.
The Distribution Agreement is subject to the same renewal requirements and
termination provisions as the Investment Advisory Agreement described above.
PERFORMANCE DATA
From time to time one or more of the Fund's Portfolios may include its
average annual total return, as well as yield, in advertisements or information
furnished to present or prospective shareholders. Average annual total return
and yield figures are based on the Portfolio's historical performance and are
not intended to indicate future performance. Average annual total return and
yield are determined in accordance with formulas specified by the Securities and
Exchange Commission.
Average annual total return quotations for the specified periods are
computed by finding the average annual compounded rates of return (based on net
investment income and any realized and unrealized capital gains or losses on
portfolio investments over such periods) that would equate the initial amount
invested to the redeemable value of such investment at the end of each period.
Average annual total return is computed assuming all dividends and distributions
are reinvested and taking into account all applicable recurring and nonrecurring
expenses.
The Fund's Money Reserve Portfolio normally computes its annualized yield
by determining the net change for a seven-day base period, exclusive of capital
changes, in the value of a hypothetical pre-existing account having a balance of
one share at the beginning of the period, dividing the net change in account
value by the value of the account at the beginning of the base period to obtain
the base period return, and multiplying the base period return by 365 and then
dividing by seven. Under this calculation, the yield does not reflect realized
and unrealized gains and losses on portfolio securities. The Securities and
15
<PAGE>
Exchange Commission also permits the calculation of a standardized effective or
compounded yield. This is computed by compounding the unannualized base period
return by dividing the base period by seven, adding one to the quotient, raising
the sum to the 365th power, and subtracting one from the result. This compounded
yield calculation also excludes realized or unrealized gains or losses on
portfolio securities.
Set forth below is average annual total return information for the shares
of each of the Fund's Portfolios, other than the Money Reserve Portfolio. The
average annual total return quotations may be of limited use for comparative
purposes because they do not reflect charges imposed at the Account level which,
if included, would decrease average annual total return.
AVERAGE ANNUAL TOTAL RETURN
REDEEMABLE VALUE
EXPRESSED AS A OF A HYPOTHETICAL
PERCENTAGE BASED $1,000 INVESTMENT
ON A HYPOTHETICAL AT THE END OF THE
$1,000 INVESTMENT PERIOD
------------------- -----------------
Balanced Portfolio:
One Year Ended
December 31, 1993 14.31% $ 1,143.10
Five Years Ended
December 31, 1993 12.58% $ 1,808.70
Inception* Through
December 31, 1993 12.15% $ 1,915.50
Capital Stock
Portfolio:
One Year Ended
December 31, 1993 17.01% $ 1,170.10
Five Years Ended
December 31, 1993 15.18% $ 2,026.90
Ten Years Ended
December 31, 1993 14.26% $ 3,794.00
Global Strategy
Portfolio:
One Year Ended
December 31, 1993 23.73% $ 1,237.30
Five Years Ended
December 31, 1993 13.33% $ 1,869.40
Inception* Through
December 31, 1993 11.31% $ 2,008.50
Growth Stock Portfolio:
One Year Ended
December 31, 1993 8.63% $ 1,086.30
Five Years Ended
December 31, 1993 11.99% $ 1,761.30
Ten Years Ended
December 31, 1993 11.26% $ 2,906.40
High Yield Portfolio:
One Year Ended
December 31, 1993 18.11% $ 1,181.11
Five Years Ended
December 31, 1993 13.46% $ 1,880.60
Inception* Through
December 31, 1993 12.31% $ 2,437.40
AVERAGE ANNUAL TOTAL RETURN
REDEEMABLE VALUE
EXPRESSED AS A OF A HYPOTHETICAL
PERCENTAGE BASED $1,000 INVESTMENT
ON A HYPOTHETICAL AT THE END OF THE
$1,000 INVESTMENT PERIOD
------------------- -----------------
Intermediate Government
Bond Portfolio:
One Year Ended
December 31, 1993 11.20% $ 1,112.00
Five Years Ended
December 31, 1993 11.21% $ 1,700.80
Ten Years Ended
December 31, 1993 10.81% $ 2,790.70
Long Term Corporate
Bond Portfolio:
One Year Ended
December 31, 1993 13.01% $ 1,130.10
Five Years Ended
December 31, 1993 11.91% $ 1,755.60
Ten Years Ended
December 31, 1993 11.91% $ 3,079.80
Multiple Strategy
Portfolio:
One Year Ended
December 31, 1993 16.66% $ 1,166.60
Five Years Ended
December 31, 1993 14.31% $ 1,951.60
Inception* Through
December 31, 1993 13.43% $ 2,982.70
Natural Resources
Portfolio:
One Year Ended
December 31, 1993 11.65% $ 1,116.50
Five Years Ended
December 31, 1993 6.21% $ 1,351.70
Inception* Through
December 31, 1993 (1.85)% $ 885.70
- ---------------
* Inception for Multiple Strategy Portfolio, May 2, 1985, for High Yield
Portfolio, May 1, 1986, for Natural Resources Portfolio and Global Strategy
Portfolio, July 1, 1987, and for Balanced Portfolio, May 2, 1988.
ADDITIONAL INFORMATION
Under a separate agreement Merrill Lynch has granted the Fund the right to
use the "Merrill Lynch" name and has reserved the right to withdraw its consent
to the use of such name by the Fund at any time, or to grant the use of such
name to any other company, and the Fund has granted Merrill Lynch, under certain
conditions, the use of any other name it might assume in the future, with
respect to any corporation organized by Merrill Lynch.
16
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH SERIES FUND, INC.
Independent Auditors' Report
- --------------------------------------------------------------------------------
The Board of Directors and Shareholders,
Merrill Lynch Series Fund, Inc.:
We have audited the accompanying statements of assets and liabilities, including
the schedules of investments, of Balanced, Capital Stock, Global Strategy,
Growth Stock, High Yield, Intermediate Government Bond, Long Term Corporate
Bond, Money Reserve, Multiple Strategy, and Natural Resources Portfolios of
Merrill Lynch Series Fund, Inc. as of December 31, 1993, the related statements
of operations for the year then ended, and changes in net assets for each of the
years in the two-year period then ended, and the financial highlights for each
of the periods presented. These financial statements and the financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and the financial
highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and the financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned at December
31, 1993 by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial positions of Balanced, Capital
Stock, Global Strategy, Growth Stock, High Yield, Intermediate Government Bond,
Long Term Corporate Bond, Money Reserve, Multiple Strategy, and Natural
Resources Portfolios of Merrill Lynch Series Fund, Inc. as of December 31, 1993,
the results of their operations, the changes in their net assets, and the
financial highlights for the respective stated periods in conformity with
generally accepted accounting principles.
DELOITTE & TOUCHE
Princeton, New Jersey
February 23, 1994
17
<PAGE>
(This page intentionally left blank)
18
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH SERIES FUND, INC.
Balanced Portfolio
Schedule of Investments as of December 31, 1993
================================================================================
<TABLE>
<CAPTION>
VALUE PERCENT OF
FACE AMOUNT ISSUE COST (NOTE 1A) NET ASSETS
- --------------------------------------------------------------------------------------------------------------------------------
US GOVERNMENT OBLIGATIONS
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
US TREASURY NOTES US Treasury Notes:
$ 1,500,000 6.375% due 1/15/2000................... $ 1,532,578 $ 1,576,395 1.8%
1,500,000 8.50% due 2/15/2000.................... 1,476,094 1,743,270 2.0
2,700,000 5.50% due 4/15/2000.................... 2,723,125 2,723,598 3.1
3,000,000 7.75% due 2/15/2001.................... 3,027,187 3,414,360 3.9
6,000,000 8.00% due 5/15/2001.................... 5,948,125 6,866,220 7.8
1,000,000 7.875% due 8/15/2001................... 1,020,156 1,138,430 1.3
6,250,000 6.375% due 8/15/2002................... 6,178,128 6,519,500 7.4
8,200,000 6.25% due 2/15/2003.................... 8,397,250 8,471,584 9.6
1,000,000 5.75% due 8/15/2003.................... 1,024,688 996,870 1.1
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL US GOVERNMENT OBLIGATIONS 31,327,331 33,450,227 38.0
- --------------------------------------------------------------------------------------------------------------------------------
INDUSTRY SHARES COMMON STOCKS
- --------------------------------------------------------------------------------------------------------------------------------
AEROSPACE 25,000 United Technologies Corp............... 1,228,233 1,550,000 1.8
- --------------------------------------------------------------------------------------------------------------------------------
AIRLINES 24,500 +AMR Corp.............................. 1,649,285 1,641,500 1.9
- --------------------------------------------------------------------------------------------------------------------------------
AIR TRANSPORT 28,000 Gannett Co., Inc....................... 1,239,100 1,603,000 1.8
- --------------------------------------------------------------------------------------------------------------------------------
ALUMINUM 21,500 Aluminum Co. of America................ 1,406,173 1,491,562 1.7
- --------------------------------------------------------------------------------------------------------------------------------
BANKING 19,500 Morgan (J.P.) & Co..................... 1,129,059 1,352,813 1.5
- --------------------------------------------------------------------------------------------------------------------------------
CHEMICALS 47,000 Nalco Chemical Co...................... 1,364,040 1,762,500 2.0
- --------------------------------------------------------------------------------------------------------------------------------
DRUGS 26,000 Bristol-Myers Squibb Co................ 1,596,780 1,511,250 1.7
- --------------------------------------------------------------------------------------------------------------------------------
FOODS 66,224 Archer-Daniels-Midland Co.............. 1,508,705 1,506,596 1.7
- --------------------------------------------------------------------------------------------------------------------------------
HARDWARE PRODUCTS 34,000 Stanley Works Co....................... 1,340,289 1,513,000 1.7
- --------------------------------------------------------------------------------------------------------------------------------
HOSPITAL MANAGEMENT 118,000 Humana Inc............................. 896,963 2,079,750 2.4
- --------------------------------------------------------------------------------------------------------------------------------
MACHINERY 39,000 Ingersoll-Rand Co...................... 1,008,480 1,491,750 1.7
63,000 Keystone International, Inc............ 1,591,910 1,724,625 2.0
57,000 Morrison Knudsen Corp.................. 1,256,435 1,432,125 1.6
------------ ------------ --------
3,856,825 4,648,500 5.3
- --------------------------------------------------------------------------------------------------------------------------------
MERCHANDISING 35,400 May Department Stores Co............... 910,188 1,393,875 1.6
- --------------------------------------------------------------------------------------------------------------------------------
MERCHANDISING SERVICES 55,000 Kelly Services, Inc.................... 1,450,000 1,519,375 1.7
- --------------------------------------------------------------------------------------------------------------------------------
NATURAL GAS 27,100 Consolidated Natural Gas Co............ 1,151,047 1,273,700 1.4
- --------------------------------------------------------------------------------------------------------------------------------
OFFICE RELATED 20,000 Hewlett-Packard Co..................... 1,014,002 1,580,000 1.8
38,000 Pitney Bowes, Inc...................... 1,177,148 1,572,250 1.8
------------ ------------ --------
2,191,150 3,152,250 3.6
- --------------------------------------------------------------------------------------------------------------------------------
OIL-INTEGRATED 50,000 Phillips Petroleum Co.................. 1,411,292 1,450,000 1.7
- --------------------------------------------------------------------------------------------------------------------------------
PETROLEUM & EQUIPMENT 84,500 Dresser Industries, Inc................ 1,709,838 1,753,375 2.0
SERVICE
- --------------------------------------------------------------------------------------------------------------------------------
PHOTOGRAPHY 25,000 Eastman Kodak Co....................... 1,084,396 1,400,000 1.6
- --------------------------------------------------------------------------------------------------------------------------------
RETAIL STORES 68,000 K mart Corp............................ 1,456,710 1,445,000 1.6
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
19
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH SERIES FUND, INC.
Balanced Portfolio
Schedule of Investments as of December 31, 1993 (Concluded)
================================================================================
<TABLE>
<CAPTION>
SHARES VALUE PERCENT OF
INDUSTRY HELD COMMON STOCKS COST (NOTE 1A) NET ASSETS
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
SEMICONDUCTOR 60,000+ Teradyne, Inc.......................... $ 884,297 $ 1,665,000 1.9%
PRODUCTION EQUIPMENT
- ----------------------------------------------------------------------------------------------------------------------------
SMALLER CAPITAL 98,256 Wheelabrator Technologies Inc.......... 1,459,510 1,744,044 2.0
- ----------------------------------------------------------------------------------------------------------------------------
TELECOMMUNICATIONS 25,700 American Telephone & Telegraph Co.
(AT&T)................................ 1,020,834 1,349,250 1.5
22,600 Bell Atlantic Corp..................... 1,071,067 1,333,400 1.5
46,000 Comsat Corp............................ 1,196,495 1,368,500 1.6
------------ ------------ --------
3,288,396 4,051,150 4.6
- ----------------------------------------------------------------------------------------------------------------------------
UTILITIES 82,000 California Energy Co. Inc.............. 1,403,585 1,517,000 1.7
- ----------------------------------------------------------------------------------------------------------------------------
TOTAL COMMON STOCKS 35,615,861 43,025,240 48.9
- ----------------------------------------------------------------------------------------------------------------------------
FACE
AMOUNT SHORT-TERM SECURITIES
- ----------------------------------------------------------------------------------------------------------------------------
COMMERCIAL PAPER* $ 1,000,000 CSW Credit, Inc., 3.25% due
2/15/1994............................. 995,847 995,847 1.1
3,000,000 Ciesco L.P., 3.35% due 1/10/1994....... 2,997,208 2,997,208 3.4
1,000,000 Corporate Asset Funding Co., 3.22% due
2/01/1994............................. 997,138 997,138 1.1
3,117,000 General Electric Capital Corp., 3.22%
due 1/03/1994......................... 3,116,164 3,116,164 3.6
1,500,000 Matterhorn Capital Corp., 3.29% due
1/12/1994............................. 1,498,355 1,498,355 1.7
1,000,000 PHH Corp., 3.25% due 1/26/1994......... 997,653 997,653 1.1
- ----------------------------------------------------------------------------------------------------------------------------
TOTAL SHORT-TERM SECURITIES 10,602,365 10,602,365 12.0
- ----------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS...................... $ 77,545,557 87,077,832 98.9
------------
------------
OTHER ASSETS LESS LIABILITIES.......... 940,512 1.1
------------ --------
NET ASSETS............................. $ 88,018,344 100.0%
------------ --------
------------ --------
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Commercial Paper is traded on a discount basis. The interest rates shown are
the discount rates paid at the time of purchase by the Portfolio.
+ Non-income producing security.
See Notes to Financial Statements.
20
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH SERIES FUND, INC.
Capital Stock Portfolio
Schedule of Investments as of December 31, 1993
================================================================================
<TABLE>
<CAPTION>
SHARES VALUE PERCENT OF
INDUSTRY HELD US COMMON STOCKS COST (NOTE 1A) NET ASSETS
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
AEROSPACE 75,000 AlliedSignal, Inc................... $ 4,734,837 $ 5,925,000 2.6%
- ---------------------------------------------------------------------------------------------------------------------------
APPAREL 65,000 Phillips-Van Heusen Corp............ 1,489,750 2,437,500 1.1
- ---------------------------------------------------------------------------------------------------------------------------
APPLIANCES 200,000 Singer Company N.V.................. 5,586,479 7,475,000 3.3
273,000 Sunbeam-Oster....................... 5,537,622 6,006,000 2.7
------------- ------------- --------
11,124,101 13,481,000 6.0
- ---------------------------------------------------------------------------------------------------------------------------
AUTOMOBILE 120,000 Ford Motor Co....................... 6,534,735 7,740,000 3.4
- ---------------------------------------------------------------------------------------------------------------------------
AUTOMOTIVE 50,000 Magna International, Inc. (Class
A)................................. 2,191,880 2,487,500 1.1
- ---------------------------------------------------------------------------------------------------------------------------
AUTOMOTIVE & EQUIPMENT 100,000 Cooper Tire & Rubber Co............. 935,397 2,500,000 1.1
- ---------------------------------------------------------------------------------------------------------------------------
BANKING 130,000 Bank of New York, Inc............... 5,504,008 7,410,000 3.3
- ---------------------------------------------------------------------------------------------------------------------------
BEVERAGES 4,800 Panamerican Beverages Inc........... 122,400 183,600 0.1
30,000 PepsiCo Inc......................... 1,192,689 1,226,250 0.5
------------- ------------- --------
1,315,089 1,409,850 0.6
- ---------------------------------------------------------------------------------------------------------------------------
CHEMICALS 45,000 PPG Industries, Inc................. 3,287,880 3,414,375 1.5
60,000 Rohm and Haas....................... 3,295,998 3,570,000 1.6
------------- ------------- --------
6,583,878 6,984,375 3.1
- ---------------------------------------------------------------------------------------------------------------------------
COMMUNICATION 125,000 ADC Telecommunications Inc.......... 3,267,290 4,453,125 2.0
EQUIPMENT 3,600 Antec Corp.......................... 64,800 88,200 0.1
75,000 DSC Communications Corp............. 3,846,110 4,607,812 2.1
25,000 Motorola, Inc....................... 1,873,675 2,309,375 1.0
25,000 Picturetel Corp..................... 472,500 465,625 0.2
75,000 Tellabs, Inc........................ 2,414,821 3,525,000 1.6
------------- ------------- --------
11,939,196 15,449,137 7.0
- ---------------------------------------------------------------------------------------------------------------------------
COMPUTER SERVICES 65,000 Computer Sciences Corp.............. 5,182,801 6,467,500 2.9
180,000 General Motors Corp................. 5,323,174 5,265,000 2.4
------------- ------------- --------
10,505,975 11,732,500 5.3
- ---------------------------------------------------------------------------------------------------------------------------
COMPUTER TECHNOLOGY 86,800 +Solectron Corp...................... 1,733,997 2,462,950 1.1
- ---------------------------------------------------------------------------------------------------------------------------
ELECTRICAL EQUIPMENT 50,000 Emerson Electric Co................. 2,779,085 3,012,500 1.3
- ---------------------------------------------------------------------------------------------------------------------------
ENGINEERING & 95,000 Thermo Electron..................... 3,847,918 3,990,000 1.8
CONSTRUCTION
- ---------------------------------------------------------------------------------------------------------------------------
ENVIRONMENTAL CONTROL 375,000 +Wheelabrator Technologies Inc. (New
Shares)............................ 4,884,183 6,656,250 3.0
- ---------------------------------------------------------------------------------------------------------------------------
FOREST PRODUCTS 90,000 Willamette Industries, Inc.......... 3,053,900 4,477,500 2.0
- ---------------------------------------------------------------------------------------------------------------------------
HEALTH CARE 41,500 +Vivra Inc........................... 748,072 959,688 0.4
- ---------------------------------------------------------------------------------------------------------------------------
HEALTH CARE- 35,000 Johnson & Johnson Co................ 1,398,078 1,566,250 0.7
PRODUCTS & SERVICES
- ---------------------------------------------------------------------------------------------------------------------------
HOUSEHOLD PRODUCTS 50,000 The Procter & Gamble Co............. 2,767,528 2,850,000 1.3
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
21
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH SERIES FUND, INC.
Capital Stock Portfolio
Schedule of Investments as of December 31, 1993 (Continued)
================================================================================
<TABLE>
<CAPTION>
SHARES VALUE PERCENT OF
INDUSTRY HELD US COMMON STOCKS COST (NOTE 1A) NET ASSETS
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
INSURANCE 12,000 America International Group Inc..... $ 1,061,447 $ 1,053,000 0.5%
30,000 Capital Holding Corp................ 1,158,858 1,113,750 0.5
------------- ------------- --------
2,220,305 2,166,750 1.0
- ---------------------------------------------------------------------------------------------------------------------------
MEDIA/PUBLISHING 100,000 News Corp. Ltd (ADR)*............... 5,300,530 5,275,000 2.4
- ---------------------------------------------------------------------------------------------------------------------------
MEDICAL 75,000 Humana Inc.......................... 1,285,625 1,321,875 0.6
100,000 Physician Corp...................... 1,815,953 2,487,500 1.1
------------- ------------- --------
3,101,578 3,809,375 1.7
- ---------------------------------------------------------------------------------------------------------------------------
MERCHANDISING 70,000 Heilig-Meyers Co.................... 1,007,066 2,730,000 1.2
- ---------------------------------------------------------------------------------------------------------------------------
OFFICE EQUIPMENT 120,000 Danka Business Systems PLC (ADR)*... 2,690,173 4,747,500 2.1
- ---------------------------------------------------------------------------------------------------------------------------
OIL-INTEGRATED 40,000 Chevron Corp........................ 3,515,131 3,485,000 1.6
10,000 Mobil Corp.......................... 787,480 790,000 0.3
------------- ------------- --------
4,302,611 4,275,000 1.9
- ---------------------------------------------------------------------------------------------------------------------------
PAPER & PACKAGING 132,000 +Crown Cork & Seal Co., Inc.......... 2,054,169 5,527,500 2.5
15,000 Union Camp Corp..................... 715,680 714,375 0.3
------------- ------------- --------
2,769,849 6,241,875 2.8
- ---------------------------------------------------------------------------------------------------------------------------
PETROLEUM-DOMESTIC 125,000 Phillips Petroleum Co............... 3,587,975 3,625,000 1.6
- ---------------------------------------------------------------------------------------------------------------------------
PUBLISHING 50,000 Gannett Co.......................... 2,440,207 2,862,500 1.3
- ---------------------------------------------------------------------------------------------------------------------------
SERVICES 25,000 Block (H&R), Inc.................... 964,250 1,018,750 0.5
- ---------------------------------------------------------------------------------------------------------------------------
SMALL CAPITAL 40,000 Bandag, Inc. (Class A).............. 1,895,894 2,070,000 0.9
60,000 Kelly Services, Inc. (Class A)
(Non-Voting)....................... 1,618,899 1,657,500 0.8
------------- ------------- --------
3,514,793 3,727,500 1.7
- ---------------------------------------------------------------------------------------------------------------------------
SOFTWARE-COMPUTERS 30,000 Microsoft Corp...................... 2,505,671 2,418,750 1.1
- ---------------------------------------------------------------------------------------------------------------------------
TELECOMMUNICATIONS 25,000 ALC Communications Inc.............. 706,200 718,750 0.3
112,140 LDDS Communication Inc.............. 4,930,759 5,438,790 2.4
265,000 MCI Communications, Corp............ 7,486,412 7,469,688 3.3
30,000 Sprint Corp......................... 1,112,100 1,042,500 0.5
------------- ------------- --------
14,235,471 14,669,728 6.5
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
22
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH SERIES FUND, INC.
Capital Stock Portfolio
Schedule of Investments as of December 31, 1993 (Continued)
================================================================================
<TABLE>
<CAPTION>
SHARES VALUE PERCENT OF
INDUSTRY HELD US COMMON STOCKS COST (NOTE 1A) NET ASSETS
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
UTILITIES-ELECTRIC 175,000 California Energy Co., Inc............. $ 3,376,640 $ 3,237,500 1.4 %
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL US COMMON STOCKS 136,088,726 164,337,228 73.4
- ---------------------------------------------------------------------------------------------------------------------------
COUNTRY FOREIGN STOCKS & WARRANTS++
- ---------------------------------------------------------------------------------------------------------------------------
ARGENTINA 16,100 +Banco de Galicia y Buenos Aires S.A.
(ADR)* (2)............................ 304,500 647,019 0.3
25,000 +Banco Frances del Rio de la Plata S.A.
(ADR)* (2)............................ 763,707 984,375 0.4
275,000 Telecom Argentina S.A.
(ADR)* (11)........................... 1,324,293 1,730,461 0.8
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN ARGENTINA 2,392,500 3,361,855 1.5
- ---------------------------------------------------------------------------------------------------------------------------
CANADA 25,000 Hudson Bay Co. ORD (10)................ 751,800 745,846 0.3
100,000 International Semi-Tech
Microelectronics, Inc.
(Receipts) (4)**...................... 656,627 566,465 0.3
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN CANADA 1,408,427 1,312,311 0.6
- ---------------------------------------------------------------------------------------------------------------------------
CHILE 28,400 ++Distribuidora Chilectra Metropolitana
S.A. (ADR)* (13)...................... 794,176 1,166,104 0.5
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN CHILE 794,176 1,166,104 0.5
- ---------------------------------------------------------------------------------------------------------------------------
FRANCE 1,608 +Compagnie Generale des Eaux (4)........ 600,783 794,621 0.4
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN FRANCE 600,783 794,621 0.4
- ---------------------------------------------------------------------------------------------------------------------------
GERMANY 1,000 Mannesmann AG (6)...................... 171,644 243,026 0.1
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN GERMANY 171,644 243,026 0.1
- ---------------------------------------------------------------------------------------------------------------------------
HONG KONG 20,000 Cheung Kong Holdings Ltd. (9).......... 72,054 122,362 0.1
512,911 Dairy Farm International
Holdings (5).......................... 885,802 1,022,767 0.4
159,729 HSBC Holdings PLC (2).................. 1,083,117 2,378,458 1.1
125,000 Henderson Land Development
Co. (9)............................... 394,975 922,569 0.4
500,000 Hong Kong Land Holdings Ltd. (9)....... 972,798 1,773,922 0.8
475,000 Hutchison Whampoa, Ltd. (7)............ 1,012,865 2,367,927 1.0
700,000 Johnson Electric Holdings Ltd. (13).... 1,320,382 1,794,639 0.8
200,000 Swire Pacific Ltd. (Class A) (10)...... 745,404 1,799,819 0.8
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN HONG KONG 6,487,397 12,182,463 5.4
- ---------------------------------------------------------------------------------------------------------------------------
MEXICO 75,000 Consorcio G Grupo Dina, S.A. de C.V.
(ADR)* (1)............................ 1,187,843 2,090,625 1.0
120,000 Empresas ICA Sociedad Controladora,
S.A. de C.V. (ADR)* (11).............. 2,440,842 3,390,000 1.5
60,000 +Grupo Financiero Serfin, S.A. de C.V.
(ADR)* (2)............................ 1,496,021 1,770,000 0.8
80,000 Telefonos de Mexico, S.A. de C.V.
(Telmex) (ADR)* (11).................. 3,350,303 5,400,000 2.4
50,000 Transportacion Maritima de Mexico, S.A.
de C.V. (ADR)* (12)................... 402,500 512,500 0.2
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN MEXICO 8,877,509 13,163,125 5.9
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
23
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH SERIES FUND, INC.
Capital Stock Portfolio
Schedule of Investments as of December 31, 1993 (Continued)
================================================================================
<TABLE>
<CAPTION>
SHARES VALUE PERCENT OF
COUNTRY HELD FOREIGN STOCKS & WARRANTS COST (NOTE 1A) NET ASSETS
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NETHERLANDS 25,000 Royal Dutch Petroleum Co. N.V.
(ADR)* (8)............................ $ 2,079,228 $ 2,609,375 1.2%
- ----------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN THE NETHERLANDS 2,079,228 2,609,375 1.2
- ----------------------------------------------------------------------------------------------------------------------------
PORTUGAL 75,000 Banco Comercial Portugues
(ADR)* (2)............................ 1,016,030 1,143,750 0.5
40,000 Espirito Santo Financial Holdings S.A.
(ADR)* (2)............................ 1,152,154 1,410,000 0.6
- ----------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN PORTUGAL 2,168,184 2,553,750 1.1
- ----------------------------------------------------------------------------------------------------------------------------
SPAIN 25,000 Repsol S.A. (ADR)* (8)................. 639,292 777,700 0.3
- ----------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN SPAIN 639,292 777,700 0.3
- ----------------------------------------------------------------------------------------------------------------------------
UNITED KINGDOM 10,000 British Petroleum PLC (ADR)* (8)....... 566,562 640,000 0.3
268,187 British Petroleum PLC (8).............. 1,291,041 1,426,969 0.6
125,000 Huntingdon International Holdings PLC
(ADR)* (9)............................ 2,753,657 1,140,625 0.5
50,000 Reuters Holdings PLC (ADR)* (3)........ 2,644,375 3,950,000 1.8
- ----------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN THE UNITED
KINGDOM 7,255,635 7,157,594 3.2
- ----------------------------------------------------------------------------------------------------------------------------
VENEZUELA 195,000 ++Siderurgica Venezolana SIVENSA,
S.A.I.C.A.-S.A.C.A. (ADR)*
(Warrants) (a)(1)..................... 487,750 27,300 0.0
- ----------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN VENEZUELA 487,750 27,300 0.0
- ----------------------------------------------------------------------------------------------------------------------------
TOTAL FOREIGN STOCKS & WARRANTS 33,362,525 45,349,224 20.2
- ----------------------------------------------------------------------------------------------------------------------------
FACE
AMOUNT FOREIGN BONDS
- ----------------------------------------------------------------------------------------------------------------------------
NETHERLANDS $ 2,740,000 Aegon Corp., 7.00% due
9/15/2001 (Non-Convertible)........... 3,522,612 4,055,200 1.8
- ----------------------------------------------------------------------------------------------------------------------------
TOTAL FOREIGN BONDS 3,522,612 4,055,200 1.8
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
24
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH SERIES FUND, INC.
Capital Stock Portfolio
Schedule of Investments as of December 31, 1993 (Concluded)
================================================================================
<TABLE>
<CAPTION>
FACE VALUE PERCENT OF
AMOUNT SHORT-TERM SECURITIES*** COST (NOTE 1A) NET ASSETS
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
US GOVERNMENT $ 3,250,000 Federal Farm Credit Bank, 3.18% due
AGENCY OBLIGATIONS 1/06/1994............................. $ 3,248,278 $ 3,248,278 1.5%
- ----------------------------------------------------------------------------------------------------------------------------
COMMERCIAL PAPER 8,336,000 General Electric Capital Corp., 3.22%
due 1/03/1994......................... 8,333,763 8,333,763 3.7
- ----------------------------------------------------------------------------------------------------------------------------
TOTAL SHORT-TERM SECURITIES 11,582,041 11,582,041 5.2
- ----------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS...................... $184,555,904 225,323,693 100.6
------------
------------
LIABILITIES IN EXCESS OF OTHER ASSETS.. (1,352,814) (0.6)
------------ -----
NET ASSETS............................. $223,970,879 100.0%
------------ -----
------------ -----
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Warrants entitle the Portfolio to purchase a predetermined number of shares
of Common Stock. The purchase price and number of shares are subject to
adjustment under certain conditions until the expiration date.
* American Depositary Receipt (ADR).
** Receipts evidence payment by the Portfolio of 40% of the purchase price of
Class A Shares of International Semi-Tech Microelectronics, Inc. The
Portfolio is obligated to pay the remaining 60%, approximately $985,000,
over the next two years.
*** Commercial Paper and US Government Obligations are traded on a discount
basis; the interest rates shown are the discount rates paid at the time of
purchase by the Portfolio.
+ Non-income producing security.
++ Restricted security as to resale. The value of the Portfolio's investments
in restricted securities was approximately $1,193,000, representing 0.53% of
net assets.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
ISSUE ACQUISITION DATE COST (NOTE A)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Distribuidora Chilectra Metropolitana S.A. (ADR)......................... 2/12/1992 $ 794,176 $1,166,104
Siderurgica Venezolana SIVENSA, S.A.I.C.A.-S.A.C.A. (ADR) (Warrants)..... 2/13/1992 487,750 27,300
- -------------------------------------------------------------------------------------------------------------------------
TOTAL $1,281,926 $1,193,404
---------- ----------
---------- ----------
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
++ Corresponding industry groups for foreign stocks and warrants:
(1) Automotive & Equipment
(2) Banking
(3) Business Services
(4) Consumer Electronics
(5) Foods/Food Processing
(6) Machinery
(7) Multi-Industry
(8) Petroleum--International
(9) Real Estate
(10) Retail
(11) Telecommunications
(12) Transportation
(13) Utilities--Electric
See Notes to Financial Statements.
25
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH SERIES FUND, INC.
Global Strategy Portfolio
Schedule of Investments as of December 31, 1993
================================================================================
<TABLE>
<CAPTION>
SHARES VALUE PERCENT OF
INDUSTRY HELD US STOCKS COST (NOTE 1A) NET ASSETS
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
AEROSPACE 15,600 United Technologies Corp.............. $ 803,052 $ 967,200 0.5%
- ----------------------------------------------------------------------------------------------------------------------------
AIRLINES 13,400 +AMR Corp.............................. 890,505 897,800 0.5
- ----------------------------------------------------------------------------------------------------------------------------
ALUMINUM 14,200 Aluminum Co. of America............... 980,819 985,125 0.5
- ----------------------------------------------------------------------------------------------------------------------------
BANKING 13,300 Morgan (J.P.) & Co. .................. 862,286 922,688 0.5
- ----------------------------------------------------------------------------------------------------------------------------
BUILDING RELATED 20,500 Stanley Works Co...................... 813,343 912,250 0.5
- ----------------------------------------------------------------------------------------------------------------------------
BUILDING SERVICES 40,000 Kelly Services, Inc. (Class A)........ 1,102,500 1,105,000 0.6
- ----------------------------------------------------------------------------------------------------------------------------
CHEMICALS 29,000 Nalco Chemical Co..................... 882,114 1,087,500 0.6
- ----------------------------------------------------------------------------------------------------------------------------
COMPUTER TECHNOLOGY 12,100 Hewlett-Packard Co.................... 664,392 955,900 0.5
- ----------------------------------------------------------------------------------------------------------------------------
FOOD 41,171 Archer-Daniels-Midland Co............. 881,550 936,640 0.5
- ----------------------------------------------------------------------------------------------------------------------------
HOSPITAL SUPPLIES 32,000 Abbott Laboratories................... 895,745 944,000 0.5
- ----------------------------------------------------------------------------------------------------------------------------
MACHINERY 22,600 Ingersoll-Rand Co..................... 648,250 864,450 0.5
33,000 Morrison Knudsen Corp................. 788,863 829,125 0.4
------------ ------------ --------
1,437,113 1,693,575 0.9
- ----------------------------------------------------------------------------------------------------------------------------
MISCELLANEOUS 40,000 Keystone International, Inc........... 1,011,146 1,095,000 0.6
- ----------------------------------------------------------------------------------------------------------------------------
OFFICE RELATED 21,500 Pitney Bowes, Inc..................... 759,945 889,563 0.5
- ----------------------------------------------------------------------------------------------------------------------------
OIL SERVICES 53,000 Dresser Industries, Inc............... 1,115,155 1,099,750 0.6
19,000 Schlumberger Ltd...................... 1,166,038 1,123,375 0.6
------------ ------------ --------
2,281,193 2,223,125 1.2
- ----------------------------------------------------------------------------------------------------------------------------
PETROLEUM 36,500 Phillips Petroleum Co. ............... 1,049,930 1,058,500 0.6
- ----------------------------------------------------------------------------------------------------------------------------
PHARMACEUTICALS 17,100 Bristol-Myers Squibb Co............... 1,021,328 993,938 0.6
- ----------------------------------------------------------------------------------------------------------------------------
PHOTOGRAPHIC 15,000 Eastman Kodak Co...................... 685,070 840,000 0.5
- ----------------------------------------------------------------------------------------------------------------------------
PRINTING & PUBLISHING 17,000 Gannett Co., Inc. 756,541 973,250 0.5
- ----------------------------------------------------------------------------------------------------------------------------
RETAIL STORES 39,000 K mart Corp........................... 874,995 828,750 0.5
20,000 May Department Stores Co.............. 630,085 787,500 0.4
------------ ------------ --------
1,505,080 1,616,250 0.9
- ----------------------------------------------------------------------------------------------------------------------------
SEMICONDUCTOR 38,000 +Teradyne Inc.......................... 615,480 1,054,500 0.6
PRODUCTION EQUIPMENT
- ----------------------------------------------------------------------------------------------------------------------------
TELECOMMUNICATIONS 17,000 American Telephone & Telegraph Co..... 761,814 892,500 0.5
29,000 Comsat Corp........................... 552,524 862,750 0.5
15,000 Bell Atlantic Corp.................... 793,645 885,000 0.5
------------ ------------ --------
2,107,983 2,640,250 1.5
- ----------------------------------------------------------------------------------------------------------------------------
UTILITIES-ELECTRIC 47,000 +California Energy Co., Inc............ 818,708 869,500 0.5
- ----------------------------------------------------------------------------------------------------------------------------
TOTAL US STOCKS 22,825,823 25,661,554 14.1
- ----------------------------------------------------------------------------------------------------------------------------
COUNTRY FOREIGN STOCKS & WARRANTS
- ----------------------------------------------------------------------------------------------------------------------------
ARGENTINA 33,350 +Banco de Galicia y Buenos Aires S.A.
(ADR)* (2)........................... 651,825 1,340,253 0.7
40,000 +Banco Frances del Rio de la Plata S.A.
(ADR)* (3)........................... 1,203,476 1,575,000 0.9
- ----------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN ARGENTINA 1,855,301 2,915,253 1.6
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
26
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH SERIES FUND, INC.
Global Strategy Portfolio
Schedule of Investments as of December 31, 1993 (Continued)
================================================================================
<TABLE>
<CAPTION>
SHARES VALUE PERCENT OF
COUNTRY HELD FOREIGN STOCKS & WARRANTS COST (NOTE 1A) NET ASSETS
<S> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------
AUSTRALIA 275,000 C.S.R. Ltd. Ord. (27).................. $ 800,378 $ 910,815 0.5%
120,000 National Australia Bank Ltd. (2)....... 812,521 1,003,390 0.6
258,500 Pacific Dunlop, Ltd. (27).............. 862,539 947,397 0.5
- ----------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN AUSTRALIA 2,475,438 2,861,602 1.6
- ----------------------------------------------------------------------------------------------------------------------------
BRAZIL 89,000 +Aracruz Celulose S.A. (ADR)* (16)...... 958,752 1,168,125 0.6
- ----------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN BRAZIL 958,752 1,168,125 0.6
- ----------------------------------------------------------------------------------------------------------------------------
CANADA 59,000 Canadian Pacific Ltd. (27)............. 955,145 958,750 0.5
27,000 Imperial Oil (29)...................... 990,623 912,576 0.5
38,000 Northern Telecommunications Ltd. (38).. 1,073,547 1,173,250 0.6
80,000 Thomson Corp. (25)..................... 987,083 981,873 0.6
50,000 Westcoast Energy, Inc. (28)............ 803,167 825,000 0.5
- ----------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN CANADA 4,809,565 4,851,449 2.7
- ----------------------------------------------------------------------------------------------------------------------------
FRANCE 6,300 Alcatel Alsthom (7).................... 736,054 896,805 0.5
9,500 Compagnie de Saint Gobain (18)......... 900,246 944,379 0.5
2,400 +Compagnie Generale des Eaux (44)....... 1,045,190 1,186,002 0.7
17,033 +Schneider S.A. (12)++.................. 1,055,353 1,269,916 0.7
4,833 +Schneider S.A. (Warrants) (a) (12)..... 40,087 61,444 0.0
17,000 TOTAL S.A. (b) (31).................... 728,152 927,456 0.5
- ----------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN FRANCE 4,505,082 5,286,002 2.9
- ----------------------------------------------------------------------------------------------------------------------------
GERMANY 4,300 +Mannesmann AG (22)..................... 776,273 1,045,010 0.6
3,400 Preussag S.A. (27)..................... 806,935 846,822 0.5
2,900 RWE AG (Rheinisch Westfalisches) (42).. 721,339 892,436 0.5
2,500 Siemens AG (13)........................ 1,024,176 1,146,822 0.6
6,800 Thyssen AG (23)........................ 829,859 1,077,596 0.6
- ----------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN GERMANY 4,158,582 5,008,686 2.8
- ----------------------------------------------------------------------------------------------------------------------------
HONG KONG 156,000 China Light & Power Co., Ltd. (42)..... 540,623 1,141,266 0.6
200,000 Hutchison Whampoa Ltd. (10)............ 651,402 997,022 0.6
140,000 Swire Pacific, Ltd. (Class A) (27)..... 590,507 1,259,873 0.7
- ----------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN HONG KONG 1,782,532 3,398,161 1.9
- ----------------------------------------------------------------------------------------------------------------------------
ITALY 230,000 +Danieli & Co. (22)..................... 853,812 776,843 0.4
250,000 Italcementi S.p.A. (8)................. 861,665 896,759 0.5
625,000 Societa Finanziaria Telefonica (38).... 1,120,456 1,263,529 0.7
- ----------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN ITALY 2,835,933 2,937,131 1.6
- ----------------------------------------------------------------------------------------------------------------------------
JAPAN 89,000 Asahi Glass Co., Ltd. (5).............. 1,015,095 844,886 0.5
24,000 +Bandai Co., Ltd. (39).................. 789,252 904,890 0.5
66,000 Canon, Inc. (13)....................... 795,416 910,263 0.5
57,000 Dai Nippon Printing Co., Ltd. (34)..... 810,694 811,660 0.4
58,000 Daiwa House Industries, Ltd. (19)...... 804,954 779,151 0.4
50,000 Fuji Photo Film Co., Ltd. (33)......... 1,191,261 1,106,036 0.6
130,000 Hitachi Cable, Ltd. (7)................ 838,588 840,588 0.5
19,000 +Ito-Yokado Co., Ltd. (36).............. 723,123 867,813 0.5
83,000 +Kamigumi Co. (40)...................... 992,472 877,127 0.5
54,000 Kandenko Co., Ltd. (4)................. 1,132,730 1,034,927 0.6
42,000 Kansai Electric Power Co. (43)......... 1,202,213 1,053,197 0.6
90,000 Maeda Corp. (4)........................ 833,400 806,018 0.4
200,000 Makino Milling Machine Co. (26)........ 1,276,986 931,399 0.5
69,000 Makita Electric Works, Ltd. (13)....... 1,116,229 1,204,997 0.7
</TABLE>
27
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH SERIES FUND, INC.
Global Strategy Portfolio
Schedule of Investments as of December 31, 1993 (Continued)
================================================================================
<TABLE>
<CAPTION>
SHARES VALUE PERCENT OF
COUNTRY HELD FOREIGN STOCKS & WARRANTS COST (NOTE 1A) NET ASSETS
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
JAPAN (CONCLUDED) 180,000 Mitsubishi Heavy Industry, Ltd. (7).... $ 1,018,102 $ 991,402 0.5%
17,000 Nintendo Ltd. (11)..................... 1,422,356 1,093,140 0.6
156,000 Nippon Fire and Marine Insurance Co.,
Ltd. (21).............................. 1,030,025 1,004,514 0.5
161,000 Nippon Oil Co., Ltd. (31).............. 1,066,171 942,988 0.5
149,000 Okumura Corp. (4)...................... 1,124,458 1,151,594 0.6
95,000 Sekisui Chemical Co. Ltd. (9).......... 957,332 850,797 0.5
60,000 Sharp Corp. (13)....................... 846,334 816,765 0.4
42,000 +Shikoku Electric Power Co. (42)........ 1,054,169 1,008,060 0.6
37,000 Tokyo Electric Power Co., Inc. (42).... 1,078,823 1,020,598 0.6
69,000 Tokyo Style Co. (1).................... 1,104,055 994,895 0.5
48,000 Toto Ltd. (20)......................... 928,643 786,674 0.4
34,000 +Toyo Seikan Kaisha Corp. (24).......... 1,000,885 852,588 0.5
42,000 +Yamazaki Baking Ltd. (15).............. 719,202 808,705 0.4
- ----------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN JAPAN 26,872,968 25,295,672 13.8
- ----------------------------------------------------------------------------------------------------------------------------
MALAYSIA 390,000 Sime Darby BHD (11).................... 797,834 1,093,593 0.6
- ----------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN MALAYSIA 797,834 1,093,593 0.6
- ----------------------------------------------------------------------------------------------------------------------------
MEXICO 42,000 Cementos Mexicanos, S.A. de C.V.
(Series B) (8)......................... 466,351 1,252,560 0.7
356,666 +Cifra, S.A. de C.V. (36)............... 411,688 1,070,572 0.6
37,000 Consorcio G Groupo Dina S.A. de
C.V. (41).............................. 626,607 1,031,375 0.6
40,000 Empresas ICA Sociedad Controladora
S.A. de C.V. (38)...................... 881,022 1,130,000 0.6
16,250 Telefonos de Mexico, S.A. de C.V.
(Telmex) (ADR)* (38)................... 578,346 1,096,875 0.6
- ----------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN MEXICO 2,964,014 5,581,382 3.1
- ----------------------------------------------------------------------------------------------------------------------------
NETHERLANDS 22,306 ABN Amro Holdings N.V. (2)............. 557,801 821,341 0.4
8,400 Royal Dutch Petroleum Co., N.V.
(ADR)* (31)............................ 690,288 876,750 0.5
13,000 Ver Ner Utigevers (34)................. 725,489 1,162,890 0.6
- ----------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN THE NETHERLANDS 1,973,578 2,860,981 1.5
- ----------------------------------------------------------------------------------------------------------------------------
NORWAY 60,937 Hafslund Nycomed, Inc. (Class B) (32).. 1,231,758 1,019,284 0.6
22,500 Kvaerner, Inc. (Class B) (7)........... 742,138 1,090,232 0.6
- ----------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN NORWAY 1,973,896 2,109,516 1.2
- ----------------------------------------------------------------------------------------------------------------------------
PORTUGAL 73,800 Banco Comercial Portuges (ADR)* (2).... 958,590 1,125,450 0.6
- ----------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN PORTUGAL 958,590 1,125,450 0.6
- ----------------------------------------------------------------------------------------------------------------------------
SINGAPORE 97,000 Jurong Shipyard Ltd. (4)............... 578,773 874,689 0.5
810,000 Neptune Orient Lines Ltd. (37)......... 829,336 1,496,082 0.8
- ----------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN SINGAPORE 1,408,109 2,370,771 1.3
- ----------------------------------------------------------------------------------------------------------------------------
SPAIN 36,000 Repsol S.A. (ADR)* (31)................ 935,136 1,111,500 0.6
29,000 Telefonica Nacional de Espana S.A.
(ADR)* (38)............................ 992,515 1,131,000 0.6
- ----------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN SPAIN 1,927,651 2,242,500 1.2
- ----------------------------------------------------------------------------------------------------------------------------
SWEDEN 60,000 SKF AB 'B' Free (26)................... 744,828 970,804 0.5
- ----------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN SWEDEN 744,828 970,804 0.5
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
28
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH SERIES FUND, INC.
Global Strategy Portfolio
Schedule of Investments as of December 31, 1993 (Continued)
================================================================================
<TABLE>
<CAPTION>
SHARES VALUE PERCENT OF
COUNTRY HELD FOREIGN STOCKS & WARRANTS COST (NOTE 1A) NET ASSETS
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
SWITZERLAND 1,350 BBC Brown Boveri & Cie (26)............ $ 826,395 $ 985,613 0.5%
1,800 Holderbank Financiere Glarus AG (8).... 761,471 1,125,378 0.6
230 Roche Holdings, Ltd. (32).............. 519,178 975,664 0.5
1,800 Sulzer Gebrueder AG (22)............... 837,656 1,020,101 0.6
800 +Sulzer Gebrueder AG
(Warrants) (a) (22).................... 0 4,303 0.0
- ----------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN SWITZERLAND 2,944,700 4,111,059 2.2
- ----------------------------------------------------------------------------------------------------------------------------
THAILAND 90,000 Bangkok Bank Co. Ltd. (2).............. 696,775 888,367 0.5
120,000 M.D.X. Corp. (35)...................... 686,720 958,872 0.5
- ----------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN THAILAND 1,383,495 1,847,239 1.0
- ----------------------------------------------------------------------------------------------------------------------------
UNITED KINGDOM 99,000 Allied Lyons PLC (15).................. 939,688 997,184 0.5
177,000 British Gas PLC (28)................... 848,593 892,077 0.5
15,000 British Petroleum PLC (ADR)* (31)...... 804,800 960,000 0.5
130,000 British Telecommunications PLC (38).... 817,080 906,901 0.5
180,000 General Electric PLC (13).............. 806,276 907,196 0.5
114,000 GKN PLC (6)............................ 765,352 889,638 0.5
32,000 Grand Metropolitan PLC (ADR)* (14)..... 880,512 884,000 0.5
225,000 Hanson PLC (27)........................ 876,603 891,234 0.5
420,000 Hillsdown Holdings PLC (27)............ 1,051,087 974,593 0.5
88,000 Imperial Chemical Industries PLC (30).. 1,137,770 1,039,211 0.6
370,000 Lucas Industries PLC (6)............... 827,415 1,049,971 0.6
- ----------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN THE
UNITED KINGDOM 9,755,176 10,392,005 5.7
- ----------------------------------------------------------------------------------------------------------------------------
TOTAL FOREIGN STOCKS & WARRANTS 77,086,024 88,427,381 48.4
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
29
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH SERIES FUND, INC.
Global Strategy Portfolio
Schedule of Investments as of December 31, 1993 (Continued)
================================================================================
<TABLE>
<CAPTION>
FACE VALUE PERCENT OF
COUNTRY AMOUNT** FOREIGN BONDS COST (NOTE 1A) NET ASSETS
<S> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------
AUSTRALIA A$ 2,390,000 Queensland Treasury Corp.,
8.00% due 7/14/1999 (17)............. $ 1,744,262 $ 1,736,580 1.0%
1,500,000 Queensland Treasury, Corp.
8.00% due 5/13/2003 (17)............. 1,089,326 1,094,990 0.6
----------- ----------- ------
2,833,588 2,831,570 1.6
- ----------------------------------------------------------------------------------------------------------------------------
CANADA C$ 5,900,000 Government of Canada,
7.25% due 6/01/2003 (17)............. 4,607,624 4,668,607 2.5
- ----------------------------------------------------------------------------------------------------------------------------
FRANCE Frf 1,000,000 French Government "OAT", STRIPS****
8.125% due 5/25/1999 (17)............ 198,164 192,297 0.1
7,000,000 French Government "OAT", STRIPS****
8.50% due 4/25/2003 (17)............. 1,366,012 1,423,818 0.8
------------ ------------ ----------
1,564,176 1,616,115 0.9
- ----------------------------------------------------------------------------------------------------------------------------
ITALY Lit 1,500,000,000 Buoni Poliennali del Tesoro,
12.00% due 1/01/1998 (17)............ 984,249 975,137 0.5
1,500,000,000 Buoni Poliennali del Tesoro,
10.00% due 8/01/1998 (17)............ 994,518 929,050 0.5
------------ ------------ ----------
1,978,767 1,904,187 1.0
- ----------------------------------------------------------------------------------------------------------------------------
SWEDEN Skr 9,500,000 Government of Sweden,
10.75% due 1/23/1997 (17)............ 1,318,796 1,277,768 0.7
- ----------------------------------------------------------------------------------------------------------------------------
UNITED KINGDOM L 1,200,000 UK Treasury Gilt,
7.25% due 3/30/1998 (17)............. 1,911,258 1,885,282 1.1
350,000 UK Treasury Gilt, 9.75% due
8/27/2002 (17)....................... 697,240 637,734 0.3
------------ ------------ ----------
2,608,498 2,523,016 1.4
- ----------------------------------------------------------------------------------------------------------------------------
TOTAL FOREIGN BONDS 14,911,449 14,821,263 8.1
- ----------------------------------------------------------------------------------------------------------------------------
US GOVERNMENT & AGENCY
OBLIGATIONS
- ---------------------------------------------------------------------------------------------------------------------------
GOVERNMENT NATIONAL $ 110,488 Government National Mortgage
MORTGAGE ASSOCIATION Association, 9.00% due
8/15/2016 (c)..................... 109,418 118,188 0.1
- ---------------------------------------------------------------------------------------------------------------------------
US GOVERNMENT US Treasury Notes:
OBLIGATIONS 6,600,000 5.50% due 4/15/2000............. 6,674,961 6,657,750 3.7
1,000,000 8.00% due 5/15/2001............. 984,375 1,143,906 0.6
2,000,000 7.875% due 8/15/2001............ 2,042,656 2,276,876 1.3
1,950,000 7.50% due 11/15/2001............ 1,979,055 2,175,773 1.2
1,200,000 7.50% due 5/15/2002............. 1,291,344 1,342,876 0.7
1,250,000 6.375% due 8/15/2002............ 1,248,633 1,303,711 0.7
4,600,000 6.25% due 2/15/2003............. 4,724,250 4,752,375 2.6
3,000,000 5.75% due 8/15/2003............. 3,058,906 2,990,157 1.6
------------ ------------- ----------
22,004,180 22,643,424 12.4
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL US GOVERNMENT & AGENCY
OBLIGATIONS 22,113,598 22,761,612 12.5
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
30
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH SERIES FUND, INC.
Global Strategy Portfolio
Schedule of Investments as of December 31, 1993 (Concluded)
================================================================================
<TABLE>
<CAPTION>
FACE VALUE PERCENT OF
AMOUNT** SHORT-TERM SECURITIES COST (NOTE 1A) NET ASSETS
<S> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------
COMMERCIAL PAPER*** $ 4,000,000 Ciesco L.P., 3.35%
due 1/10/1994..................... $ 3,996,650 $ 3,996,650 2.2%
2,000,000 Corporate Asset Funding Co., Inc.,
3.22% due 2/01/1994............... 1,994,454 1,994,454 1.1
5,000,000 CSW Credit, 3.25%
due 2/15/1994..................... 4,979,688 4,979,688 2.7
6,525,000 General Electric Capital Corp.,
3.22%
due 1/03/1994..................... 6,523,833 6,523,833 3.6
2,000,000 Hertz Funding Corp., 3.30% due
1/14/1994......................... 1,997,617 1,997,617 1.1
5,000,000 Matterhorn Capital Corp., 3.27%
due 1/18/1994..................... 4,992,279 4,992,279 2.7
3,000,000 Penney, (J.C.) Funding Corp., 3.18%
due 2/09/1994..................... 2,989,665 2,989,665 1.6
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL SHORT-TERM SECURITIES 27,474,186 27,474,186 15.0
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS.................. $ 164,411,080 179,145,996 98.1
-------------
-------------
OTHER ASSETS LESS LIABILITIES...... 3,526,048 1.9
------------- -----
NET ASSETS......................... $ 182,672,044 100.0%
------------- -----
------------- -----
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
+ Non-income producing security.
++ Restricted securities as to resale. The value of the Portfolio's investment
in restricted securities was approximately $1,269,000, representing 0.7% of
net assets.
<TABLE>
<CAPTION>
VALUE
ISSUE ACQUISITION DATE COST (NOTE 1A)
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Schneider S.A............................................................ 3/30/93 $1,055,353 $1,269,916
- ----------------------------------------------------------------------------------------------------------------------
TOTAL $1,055,353 $1,269,916
---------- ----------
---------- ----------
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
* American Depositary Receipt (ADR).
** Denominated in US dollars unless otherwise indicated.
*** Commercial Paper is traded on a discount basis; the interest rates shown
are the discount rates paid at the time of purchase by the Portfolio.
**** The interest rate shown represents the yield-to-maturity on this zero
coupon issue.
(a) Warrants entitle the Portfolio to purchase a predetermined number of shares
of common stock. The purchase price and number of shares are subject to
adjustment under certain conditions until the expiration date.
(b) Formerly TOTAL Compagnie Francaise de Petroles.
(c) Mortgage-backed bonds; original face amounts and related costs are reduced
by principal payment pass-throughs.
Corresponding industry groups for foreign stocks and bonds:
(1) Apparel
(2) Banking
(3) Banking-International
(4) Building & Construction
(5) Building Materials
(6) Business Services
(7) Capital Goods
(8) Cement
(9) Chemicals
(10) Conglomerates
(11) Consumer-Electronics
(12) Electrical Equipment
(13) Electronics
(14) Food & Beverage
(15) Food
(16) Forest Products
(17) Government (Bonds)
(18) Glass
(19) Housing
(20) Industrials
(21) Insurance
(22) Machinery
(23) Machinery and Equipment
(24) Metal Fabricating
(25) Miscellaneous
(26) Miscellaneous-Capital Goods
(27) Multi-Industry
(28) Natural Gas
(29) Oil and Gas Producers
(30) Oil Integrated
(31) Petroleum
(32) Pharmaceutical
(33) Photography
(34) Printing & Publishing
(35) Real Estate
(36) Retail Stores
(37) Shipping
(38) Telecommunications
(39) Toys
(40) Trading
(41) Trucking
(42) Utilities
(43) Utilities-Electric
(44) Utilities-Water
See Notes to Financial Statements.
31
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH SERIES FUND, INC.
Growth Stock Portfolio
Schedule of Investments as of December 31, 1993
================================================================================
<TABLE>
<CAPTION>
FACE AMOUNT/ VALUE PERCENT OF
INDUSTRY SHARES HELD STOCKS, WARRANTS AND BONDS COST (NOTE 1A) NET ASSETS
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
APPAREL 60,000 Deckers Outdoor Corp.............. $ 1,291,625 $ 1,102,500 0.9%
- -------------------------------------------------------------------------------------------------------------------------
AUTOMOTIVE 175,000 Consorcio G Groupo Dina S.A. de
C.V. (ADR)+...................... 3,449,925 4,878,125 4.0
50,000 Ek Chor China Motorcycle Co.,
Ltd.............................. 1,110,762 1,812,500 1.5
------------- ------------- --------
4,560,687 6,690,625 5.5
- -------------------------------------------------------------------------------------------------------------------------
BANKING 40,000 State Street Boston Corp.......... 1,403,750 1,495,000 1.2
- -------------------------------------------------------------------------------------------------------------------------
BEVERAGES 40,000 Coca-Cola Co...................... 1,722,600 1,785,000 1.4
65,000 Coca-Cola FEMSA S.A. (ADR)+....... 1,552,797 2,128,750 1.7
50,000 Panamerican Beverages, Inc. Class
A................................ 1,385,495 1,912,500 1.6
30,000 PepsiCo, Inc...................... 1,085,550 1,226,250 1.0
------------- ------------- --------
5,746,442 7,052,500 5.7
- -------------------------------------------------------------------------------------------------------------------------
BROADCAST-MEDIA 110,000 *Grupo Televisa, S.A. de C.V.
(ADR)+ (Series L)................ 2,949,443 4,184,702 3.4
50,000 Infinity Broadcasting Corp. (Class
A)............................... 1,446,875 1,512,500 1.2
60,000 Turner Broadcasting System, Inc.
(Class B)........................ 1,575,805 1,620,000 1.3
------------- ------------- --------
5,972,123 7,317,202 5.9
- -------------------------------------------------------------------------------------------------------------------------
BROADCASTING-CABLE 75,000 Tele-Communications Inc. (Class
A)............................... 1,843,750 2,264,063 1.8
30,000 Time Warner Inc................... 1,331,718 1,327,500 1.1
------------- ------------- --------
3,175,468 3,591,563 2.9
- -------------------------------------------------------------------------------------------------------------------------
BUSINESS SERVICES 40,000 Olsten Corp....................... 1,083,212 1,175,000 1.0
- -------------------------------------------------------------------------------------------------------------------------
CHEMICAL 40,000 Duracell International, Inc....... 1,437,426 1,435,000 1.2
PRODUCERS 20,000 Great Lakes Chemical Corp......... 1,430,913 1,492,500 1.2
------------- ------------- --------
2,868,339 2,927,500 2.4
- -------------------------------------------------------------------------------------------------------------------------
COMMUNICATIONS 30,000 cisco Systems, Inc................ 1,473,750 1,938,750 1.6
- -------------------------------------------------------------------------------------------------------------------------
CONSUMER PRODUCTS 70,000 CUC International, Inc............
AND SERVICES 2,498,786 2,520,000 2.1
- -------------------------------------------------------------------------------------------------------------------------
COSMETICS 35,000 Avon Products, Inc................ 1,887,725 1,701,875 1.4
15,000 International Flavors &
Fragrances, Inc.................. 1,577,950 1,706,250 1.4
15,000 Gillette Co....................... 942,300 894,375 0.7
------------- ------------- --------
4,407,975 4,302,500 3.5
- -------------------------------------------------------------------------------------------------------------------------
ELECTRONICS 30,000 Intel Corp........................ 1,835,000 1,863,750 1.5
- -------------------------------------------------------------------------------------------------------------------------
ENTERTAINMENT 60,000 Electronic Arts, Inc.............. 1,967,084 1,807,500 1.5
35,000 Media Vision, Inc................. 1,015,000 1,540,000 1.2
$1,000,000 Media Vision, Inc., 4.875%
due 10/01/2003................... 1,000,000 1,408,750 1.2
------------- ------------- --------
3,982,084 4,756,250 3.9
- -------------------------------------------------------------------------------------------------------------------------
FINANCE 60,000 Countrywide Credit Industries,
Inc.............................. 1,731,476 1,507,500 1.2
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
32
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH SERIES FUND, INC.
Growth Stock Portfolio
Schedule of Investments as of December 31, 1993 (Continued)
================================================================================
<TABLE>
<CAPTION>
FACE AMOUNT/ VALUE PERCENT OF
INDUSTRY SHARES HELD STOCKS, WARRANTS AND BONDS COST (NOTE 1A) NET ASSETS
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
FINANCIAL SERVICES 50,000 Federal National Mortgage
Association...................... $ 3,921,700 $ 3,925,000 3.2%
82,000 MGIC Investment Corp.............. 1,720,475 2,398,500 2.0
80,000 Primerica Corp.................... 3,397,967 3,110,000 2.5
------------- ------------- --------
9,040,142 9,433,500 7.7
- -------------------------------------------------------------------------------------------------------------------------
FOODS 30,000 Kellogg Co........................ 1,670,275 1,702,500 1.4
- -------------------------------------------------------------------------------------------------------------------------
HEALTHCARE- 60,000 IVAX Corp......................... 1,625,937 1,725,000 1.4
PHARMACEUTICALS 50,000 Teva Pharmaceutial Industries Ltd.
(ADR)+........................... 1,461,250 1,515,625 1.3
40,000 Watson Pharmaceuticals, Inc....... 1,171,800 1,005,000 0.8
------------- ------------- --------
4,258,987 4,245,625 3.5
- -------------------------------------------------------------------------------------------------------------------------
HEALTH SERVICES 150,000 Caremark International, Inc....... 2,574,400 2,943,750 2.4
80,000 Novacare, Inc..................... 1,220,175 1,220,000 1.0
------------- ------------- --------
3,794,575 4,163,750 3.4
- -------------------------------------------------------------------------------------------------------------------------
HOUSEHOLD PRODUCTS 30,000 Colgate-Palmolive Co.............. 1,753,976 1,871,250 1.5
- -----------------------------------------------------------------------------------------------------------------------
INDUSTRIAL SERVICES 50,000 Cintas Corp....................... 1,383,499 1,687,500 1.4
- -------------------------------------------------------------------------------------------------------------------------
INFORMATION 30,000 First Financial Management Corp... 1,610,555 1,702,500 1.4
PROCESSING
- -------------------------------------------------------------------------------------------------------------------------
INSURANCE 20,000 American International Group, Inc.. 1,871,300 1,755,000 1.4
15,000 General Re Corp................... 1,808,337 1,605,000 1.3
300,000 Reliance Group Holdings, Inc...... 2,390,000 2,400,000 2.0
40,000 UNUM Corp......................... 2,026,334 2,100,000 1.7
------------- ------------- --------
8,095,971 7,860,000 6.4
- -------------------------------------------------------------------------------------------------------------------------
LEISURE 50,000 PolyGram N.V. (ADR)+.............. 1,703,100 1,968,750 1.6
- -------------------------------------------------------------------------------------------------------------------------
MARKETING 25,000 Catalina Marketing Corp........... 1,026,375 1,250,000 1.0
- -------------------------------------------------------------------------------------------------------------------------
MEDICAL TECHNOLOGY 40,000 Haemonetics Corp.................. 1,091,168 1,110,000 0.9
- -------------------------------------------------------------------------------------------------------------------------
OIL SERVICES 30,000 Schlumberger Ltd., Inc............ 1,790,385 1,773,750 1.4
- -------------------------------------------------------------------------------------------------------------------------
POLLUTION CONTROL 40,000 WMX Technologies, Inc............. 1,147,400 1,055,000 0.9
- -------------------------------------------------------------------------------------------------------------------------
PUBLISHING 40,000 Scholastic Corp................... 1,805,000 1,725,000 1.4
- -------------------------------------------------------------------------------------------------------------------------
RESTAURANTS 20,000 McDonald's Corp................... 1,163,700 1,140,000 0.9
- -------------------------------------------------------------------------------------------------------------------------
RETAIL-SPECIALTY 40,000 Pep Boys-Manny, Moe & Jack........ 941,988 1,050,000 0.9
30,000 Staples Inc....................... 615,000 761,250 0.6
------------- ------------- --------
1,556,988 1,811,250 1.5
- -------------------------------------------------------------------------------------------------------------------------
RETAIL-STORES Mxp 1,000,000 *Cifra, S.A. de C.V. .............. 2,296,856 3,001,610 2.4
- -------------------------------------------------------------------------------------------------------------------------
SEMICONDUCTORS 20,000 Texas Instruments, Inc. .......... 1,458,275 1,270,000 1.0
- -------------------------------------------------------------------------------------------------------------------------
SOFTWARE-COMPUTER 60,000 Computer Associates International
Inc. ............................ 2,140,992 2,400,000 2.0
60,000 Oracle Systems, Inc. ............. 1,775,834 1,728,750 1.4
------------- ------------- --------
3,916,826 4,128,750 3.4
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
33
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH SERIES FUND, INC.
Growth Stock Portfolio
Schedule of Investments as of December 31, 1993 (Concluded)
================================================================================
<TABLE>
<CAPTION>
SHARES VALUE PERCENT OF
INDUSTRY HELD STOCKS, WARRANTS AND BONDS COST (NOTE 1A) NET ASSETS
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
TELECOMMUNICATIONS 80,000 ALC Communications Corp............. $ 2,117,100 $ 2,300,000 1.9%
40,000 Bell Atlantic Corp.................. 2,607,400 2,360,000 1.9
40,000 BroadBand Technologies, Inc......... 1,600,625 1,250,000 1.0
50,000 MCI Communications Corp............. 1,400,500 1,409,375 1.2
20,000 QUALCOMM Inc........................ 1,573,750 1,065,000 0.8
30,000 Vodafone Group PLC (ADR)+........... 2,484,440 2,677,500 2.2
------------- ------------- --------
11,783,815 11,061,875 9.0
- ----------------------------------------------------------------------------------------------------------------------------
TOYS 50,000 Mattel, Inc......................... 1,397,250 1,381,250 1.1
- ----------------------------------------------------------------------------------------------------------------------------
TOTAL STOCKS, WARRANTS AND BONDS 105,775,835 113,584,500 92.5
- ----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
FACE
AMOUNT SHORT-TERM SECURITIES
<S> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------
US GOVERNMENT $3,000,000 Federal Home Loan Bank,
AGENCY OBLIGATIONS** 3.17% due 1/18/1994................ 2,995,245 2,995,245 2.4
5,000,000 Federal National Mortgage
Association, 3.16% due 1/10/1994... 4,995,611 4,995,611 4.1
------------- ------------- --------
7,990,856 7,990,856 6.5
- ----------------------------------------------------------------------------------------------------------------------------
COMMERCIAL PAPER** 2,441,000 General Electric Capital Corp.,
3.22%
due 1/03/1994...................... 2,440,345 2,440,345 2.0
- ----------------------------------------------------------------------------------------------------------------------------
TOTAL SHORT-TERM SECURITIES 10,431,201 10,431,201 8.5
- ----------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS................... $ 116,207,036 124,015,701 101.0
=============
LIABILITIES IN EXCESS OF OTHER
ASSETS............................. (1,179,413) (1.0)
------------- --------
NET ASSETS.......................... $ 122,836,288 100.0%
============= ========
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Foreign Stocks.
** Commercial Paper and US Government Agency Obligations are traded on a
discount basis; the interest rates shown are the discount rates paid at the
time of purchase by the Portfolio.
+ American Depositary Receipt (ADR).
See Notes to Financial Statements.
34
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH SERIES FUND, INC.
High Yield Portfolio
Schedule of Investments as of December 31, 1993
================================================================================
<TABLE>
<CAPTION>
S&P MOODY'S VALUE
INDUSTRY RATING RATING FACE AMOUNT ISSUE COST (NOTE 1A)
- -----------------------------------------------------------------------------------------------------------------------------
CORPORATE BONDS
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
AIRLINES-3.1% BB+ Baa3 $ 750,000 Delta Air Lines, Inc., 9.30% due
1/02/2010......................... $ 740,775 $ 749,361
BB+ Baa1 1,000,000 United Air Lines, Inc., 9.21% due
1/21/2017......................... 1,016,820 1,008,530
USAir, Inc.:
B+ Ba3 450,000 10.00% due 7/01/2003................ 450,000 432,000
BB+ Ba2 750,000 10.375% due 3/01/2013............... 750,000 750,722
------------ ------------
2,957,595 2,940,613
- -----------------------------------------------------------------------------------------------------------------------------
AUTOMOBILES-0.9% B B2 750,000 Exide Corp., 10.75% due
12/15/2002........................ 777,188 821,250
- -----------------------------------------------------------------------------------------------------------------------------
BROADCASTING & BB- Ba3 750,000 Heritage Media Services Inc., 11.00%
PUBLISHING-2.0% due 6/15/2002..................... 796,875 830,625
B+ BB- 500,000 Sinclair Broadcasting Group, Inc.,
10.00% due 12/15/2003............. 500,000 513,750
BB- B1 500,000 World Color Press Inc., 9.125% due
3/15/2003......................... 500,000 518,750
------------ ------------
1,796,875 1,863,125
- -----------------------------------------------------------------------------------------------------------------------------
BUILDING & B+ BA3 1,000,000 U.S. Home Corp., 9.75% due
CONSTRUCTION-1.1% 6/15/2003......................... 1,000,000 1,032,500
- -----------------------------------------------------------------------------------------------------------------------------
BUILDING B+ B1 750,000 National Gypsum Co., 10.00% due
MATERIALS-1.6% 7/01/2003......................... 752,813 761,250
B+ B3 750,000 Pacific Lumber Co., 10.50% due
3/01/2003......................... 752,813 778,125
------------ ------------
1,505,626 1,539,375
- -----------------------------------------------------------------------------------------------------------------------------
BUILDING PRODUCTS-2.0% B Ba3 1,000,000 Inter-City Products Corp., 9.75% due
3/01/2000......................... 963,750 1,002,500
B- B3 1,000,000 USG Corp., 8.75% due 3/01/2017...... 908,750 925,000
------------ ------------
1,872,500 1,927,500
- -----------------------------------------------------------------------------------------------------------------------------
CAPITAL GOODS-0.5% B+ B1 500,000 Essex Group, Inc., 10.00% due
5/01/2003......................... 500,000 504,375
- -----------------------------------------------------------------------------------------------------------------------------
CELLULAR B- B3 750,000 Dial Page, Inc., 12.25% due
TELEPHONES-1.5% 2/15/2000......................... 751,500 836,250
NR NR 1,000,000 ++Page Mart, Inc., 12.25%* due
11/01/2003 (with warrants)(c)..... 556,288 600,000
------------ ------------
1,307,788 1,436,250
- -----------------------------------------------------------------------------------------------------------------------------
CHEMICALS-3.6% B B2 750,000 Agricultural Minerals & Chemical
Co., L.P., 10.75% due 9/30/2003... 750,000 791,250
B+ Ba3 1,717,000 G-I Holdings Inc., 11.15%* due
10/01/1998........................ 1,026,228 1,102,099
B B3 500,000 Harris Chemical Corp., 10.75% due
10/15/2003........................ 500,000 528,750
B- B3 1,750,000 ++Indspec Chemical Corp., 11.50%* due
12/01/2003........................ 1,005,309 1,023,750
------------ ------------
3,281,537 3,445,849
- -----------------------------------------------------------------------------------------------------------------------------
COMMUNICATIONS- B- B3 780,000 Panamsat L.P., 11.38%* due
0.6% 8/01/2003......................... 459,240 522,600
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
35
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH SERIES FUND, INC.
High Yield Portfolio
Schedule of Investments as of December 31, 1993 (Continued)
================================================================================
<TABLE>
<CAPTION>
S&P MOODY'S VALUE
INDUSTRY RATING RATING FACE AMOUNT ISSUE COST (NOTE 1A)
- -----------------------------------------------------------------------------------------------------------------------------
CORPORATE BONDS (CONTINUED)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
CONGLOMERATES-6.0% B Caa $ 500,000 Collins & Aikman Group, Inc., 7.50%*
due 1/31/2005..................... $ 432,321 $ 493,125
B+ B1 1,000,000 Foamex Capital Corp., 11.25% due
10/01/2002........................ 989,062 1,095,000
NR NR 1,000,000 Gillette Holdings Inc., 12.25% due
6/30/2002......................... 1,027,500 1,095,000
B- B3 500,000 Interlake Corp., 12.125% due
3/01/2002......................... 500,000 506,250
B+ B3 950,000 Jordan Industries Inc., 10.375% due
8/01/2003......................... 950,000 969,000
NR NR 1,000,000 MacAndrew & Forbes Group, Inc.,
13.00% due 3/01/1999.............. 995,000 1,006,250
BB- Ba3 500,000 Sherritt Gordon, Ltd., 9.75% due
4/01/2003......................... 498,750 505,000
------------ ------------
5,392,633 5,669,625
- -----------------------------------------------------------------------------------------------------------------------------
CONSUMER PRODUCTS-4.8% NR NR 1,250,000 ++Coleman Holdings Inc., 11.09%* due
5/27/1998......................... 778,440 809,375
++Formica Corp.:
NR NR 750,000 15.75%* due 10/01/2001.............. 673,711 708,750
NR NR 1,000,000 13.125% due 9/15/2005............... 1,003,750 1,015,625
NR NR 1,000,000 Liggett Group., Inc., 11.50% due
2/01/1999......................... 975,000 740,000
B- B3 1,550,000 Revlon Worldwide Corp., 14.84%* due
3/15/1998......................... 936,637 798,250
B+ B1 450,000 Sealy Corp., 9.50% due 5/01/2003.... 453,000 471,375
------------ ------------
4,820,538 4,543,375
- -----------------------------------------------------------------------------------------------------------------------------
CONTAINERS-4.3% B B2 750,000 Anchor Glass Container Co., 9.875%
due 12/15/2008.................... 750,000 768,750
B- B3 500,000 IVEX Packaging Corp., 12.50% due
12/15/2002........................ 496,495 545,000
B B 1,500,000 Silgan Holdings, Inc., 13.25%* due
6/15/1996......................... 1,140,453 1,162,500
B+ B1 750,000 Stone Container Corp., 10.25% due
12/15/2000........................ 753,750 757,500
B+ Ba3 750,000 Sweetheart Cup Co., 9.625% due
9/01/2000......................... 750,000 791,250
------------ ------------
3,890,698 4,025,000
- -----------------------------------------------------------------------------------------------------------------------------
CONVERTIBLE B- B1 500,000 Employee Benefit Plans Inc., 6.75%
BONDS+-1.9% due 7/31/2006 (2)................. 365.000 360,625
B B 2,100,000 Farm Fresh, Inc., 7.50% due
3/01/2010 (1)..................... 1,093,875 1,396,500
------------ ------------
1,458,875 1,757,125
- -----------------------------------------------------------------------------------------------------------------------------
ENERGY-11.0% B+ B1 2,000,000 Clark Oil & Refining Corp., 11.00%*
due 2/15/2000..................... 1,039,580 1,102,500
CC Caa 440,000 Empire Gas Corp., 12.00% due
3/31/2002......................... 273,900 442,200
CC Caa 280,000 Empire, Inc., 9.00% due
12/31/2007........................ 142,725 245,000
B B2 1,000,000 Ferrellgas Inc., 11.625% due
12/15/2003........................ 1,035,000 1,088,750
B+ B1 750,000 Global Marine Inc., 12.75% due
12/15/1999........................ 750,000 836,250
</TABLE>
36
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH SERIES FUND, INC.
High Yield Portfolio
Schedule of Investments as of December 31, 1993 (Continued)
================================================================================
<TABLE>
<CAPTION>
S&P MOODY'S VALUE
INDUSTRY RATING RATING FACE AMOUNT ISSUE COST (NOTE 1A)
- -----------------------------------------------------------------------------------------------------------------------------
CORPORATE BONDS (CONTINUED)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ENERGY BB B1 $ 850,000 Gulf Canada Resources, Ltd., 9.00%
(CONCLUDED) due 8/15/1999....................... $ 789,281 $ 843,996
C Caa 849,000 National Propane Corp., 13.125% due
3/01/1999......................... 660,815 844,755
BB1 Ba3 1,000,000 Noble Drilling Corp., 9.25% due
10/01/2003........................ 1,000,000 1,035,000
BB- Ba2 750,000 Rowan Companies, Inc., 11.875% due
12/01/2001........................ 772,500 838,125
BB- Ba3 750,000 Seagull Energy Corp., 8.625% due
8/01/2005......................... 751,875 750,000
CCC+ Caa 750,000 Tesoro Petroleum Corp., 12.75% due
3/15/2001......................... 564,375 750,938
B+ B1 1,125,000 Triton Energy Corp., 9.68% due
11/01/1997........................ 782,521 787,500
B+ B1 750,000 Western Co. of North America,
12.875% due 12/01/2002............ 731,258 892,500
------------ ------------
9,293,830 10,457,514
- -----------------------------------------------------------------------------------------------------------------------------
ENTERTAINMENT-5.5% B- B3 1,375,000 AMC Entertainment, Inc., 12.625% due
8/01/2002......................... 1,396,102 1,570,938
B+ B1 750,000 Cinemark USA, Inc., 12.00% due
6/01/2002......................... 750,000 840,000
CCC+ B3 1,000,000 Fair Lanes, Inc., 11.875% due
8/15/1997......................... 1,000,000 705,000
B B3 1,700,000 Marvel Holdings, Inc., 11.761%* due
4/15/1998......................... 1,048,173 1,117,750
NR Caa 1,000,000 New World Pictures Inc., 12.25%* due
9/15/1998......................... 972,000 1,015,000
------------ ------------
5,166,275 5,248,688
- -----------------------------------------------------------------------------------------------------------------------------
FINANCIAL CCC+ B2 750,000 Pioneer Finance Corp., 13.50% due
SERVICES-2.7% 12/01/1998........................ 792,187 791,250
BBB+ NR 1,000,000 Reliance Financial Services Corp.,
9.273% due 11/01/2000............. 812,630 1,015,000
B- B2 750,000 Reliance Group Holdings Inc., 9.75%
due 11/15/2003.................... 750,000 774,375
------------ ------------
2,354,817 2,580,625
- -----------------------------------------------------------------------------------------------------------------------------
FOOD & BB- Ba3 1,000,000 Del Monte Corp., 10.00% due
BEVERAGE-4.7% 5/01/2003......................... 976,250 990,000
B+ B2 1,000,000 Grand Union Co., 12.25% due
7/15/2002......................... 1,000,000 1,052,500
B- Ba3 750,000 P&C Food Markets, Inc., 11.50% due
10/15/2001........................ 780,469 839,062
B B2 500,000 Penn Traffic Co., 9.625% due
4/15/2005......................... 495,635 521,250
B B2 1,000,000 Speciality Foods Corp., 10.25% due
8/15/2001......................... 1,000,312 1,047,500
------------ ------------
4,252,666 4,450,312
- -----------------------------------------------------------------------------------------------------------------------------
HEALTH SERVICES-3.5% B- B1 750,000 Abbey Healthcare Group Inc., 9.50%
due 11/01/2002.................... 750,000 769,688
B+ B1 750,000 Continental Medical Systems Inc.,
10.875% due 8/15/2002............. 753,750 778,125
B+ B1 1,000,000 MEDIQ/PRN Life Support Services,
Inc., 11.125% due 7/01/1999....... 1,002,500 1,055,000
</TABLE>
37
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH SERIES FUND, INC.
High Yield Portfolio
Schedule of Investments as of December 31, 1993 (Continued)
================================================================================
<TABLE>
<CAPTION>
S&P MOODY'S VALUE
INDUSTRY RATING RATING FACE AMOUNT ISSUE COST (NOTE 1A)
- -----------------------------------------------------------------------------------------------------------------------------
CORPORATE BONDS (CONTINUED)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
HEALTH SERVICES B- B3 $ 605,000 The Multicare Companies Inc., 12.50%
(CONCLUDED) due 7/01/2002..................... $ 589,393 $ 680,625
------------ ------------
3,095,643 3,283,438
- -----------------------------------------------------------------------------------------------------------------------------
HIGH TECHNOLOGY-0.9% B- B3 1,000,000 ComputerVision Corp., 11.375% due
8/15/1999......................... 995,000 860,000
- -----------------------------------------------------------------------------------------------------------------------------
HOTELS & B B2 1,000,000 Aztar Corp., 11.00% due
10/01/2002........................ 1,016,250 1,020,000
CASINOS-5.0% NR NR 635,000 Goldriver Hotel & Casino Corp.,
11.375% due 8/31/1999............. 790,072 517,525
BB- Ba3 750,000 Showboat Inc., 9.25% due
5/01/2008......................... 755,625 768,750
NR Caa 582,000 Trump Castle Funding, Inc., 9.50%
due 8/15/1998 (a)................. 414,526 482,696
B B3 1,000,000 Trump Plaza Funding, Inc., 10.875%
due 6/15/2001..................... 993,777 1,005,000
NR Caa 1,019,000 Trump Taj Mahal Funding, Inc.,
11.35% due 11/15/1999 (a)......... 823,338 957,945
------------ ------------
4,793,588 4,751,916
- -----------------------------------------------------------------------------------------------------------------------------
INDUSTRIAL BB- B2 650,000 ADT Operations, 9.25% due
SERVICES-5.2% 8/01/2003......................... 650,000 669,500
B- B3 1,500,000 Bell & Howell Co., 10.75% due
10/01/2002........................ 1,522,500 1,646,250
B+ B2 450,000 Blount, Inc., 9.00% due 6/15/2003... 450,000 466,875
C Caa 878,000 Southeastern Public Service Co.,
11.875% due 2/01/1998............. 653,324 899,950
NR Caa 1,185,648 Thermadyne Industries, Inc., 15.00%
due 5/01/1999 (a)................. 1,180,438 1,239,166
------------ ------------
4,456,262 4,921,741
- -----------------------------------------------------------------------------------------------------------------------------
INDUSTRIAL-3.5% B B2 1,000,000 Coca Cola Bottling Co., Inc., 9.00%
due 11/15/2003.................... 1,000,000 1,002,500
BB Ba3 750,000 Methanex Corp., 8.875% due
11/15/2001........................ 744,735 776,250
B+ B2 1,500,000 Navistar Financial Co., 8.875% due
11/15/1998........................ 1,500,000 1,518,750
------------ ------------
3,244,735 3,297,500
- -----------------------------------------------------------------------------------------------------------------------------
METAL & MINING-1.1% B- B3 1,750,000 Maxxam Group, Inc., 12.25%* due
8/01/2003......................... 990,230 1,001,875
- -----------------------------------------------------------------------------------------------------------------------------
PAPER-2.5% B B3 500,000 Gaylord Container Corp., 11.50% due
5/15/2001......................... 500,000 535,000
B+ B1 750,000 Riverwood International, Corp.,
11.25% due 6/15/2002.............. 750,000 821,250
B B1 1,000,000 Stone Container Corp., 11.875% due
12/01/1998........................ 997,500 1,017,500
------------ ------------
2,247,500 2,373,750
- -----------------------------------------------------------------------------------------------------------------------------
PAPER & B- Caa 1,250,000 Ivex Holdings Inc., 11.33%* due
PACKAGING-0.7% 3/15/2005......................... 631,347 631,250
- -----------------------------------------------------------------------------------------------------------------------------
POLLUTION CONTROL-0.7% B B1 683,000 International Technology Corp.,
9.375% due 7/01/1996.............. 614,700 686,415
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
38
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH SERIES FUND, INC.
High Yield Portfolio
Schedule of Investments as of December 31, 1993 (Continued)
================================================================================
<TABLE>
<CAPTION>
S&P MOODY'S VALUE
INDUSTRY RATING RATING FACE AMOUNT ISSUE COST (NOTE 1A)
- -----------------------------------------------------------------------------------------------------------------------------
CORPORATE BONDS (CONCLUDED)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
RAILROADS-0.8% B+ Ba3 $ 750,000 Southern Pacific Rail Co., 9.375%
due 8/15/2005..................... $ 750,000 $ 802,500
- -----------------------------------------------------------------------------------------------------------------------------
RESTAURANTS-1.6% B- B2 750,000 Flagstar Corp., 11.375% due
9/15/2003......................... 750,000 776,250
B B2 750,000 Foodmaker, Inc., 9.75%
due 6/01/2002..................... 738,750 763,125
------------ ------------
1,488,750 1,539,375
- -----------------------------------------------------------------------------------------------------------------------------
RETAIL-3.7% B- B3 1,000,000 Bradlees, Inc., 11.00% due
8/01/2002......................... 1,023,750 1,078,750
B- B3 1,500,000 Pamida Holdings, Inc., 11.75% due
3/15/2003......................... 1,506,563 1,533,750
B- B3 900,000 Specialty Retail Services Inc.,
11.00% due 8/15/2003.............. 900,000 927,000
------------ ------------
3,430,313 3,539,500
- -----------------------------------------------------------------------------------------------------------------------------
TEXTILES-1.1% B+ B3 1,000,000 Westpoint Stevens Industries, 9.375%
due 12/15/2005.................... 1,000,000 1,013,750
- -----------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION-1.1% B+ B3 1,000,000 Viking Star Shipping Co., 9.625% due
7/15/2003......................... 1,030,000 1,031,250
- -----------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION BB- B1 1,000,000 International Shipholding Corp.,
SERVICES-1.1% 9.00% due 7/01/2003............... 999,375 1,022,500
- -----------------------------------------------------------------------------------------------------------------------------
UTILITIES-2.4% BB+ Ba1 1,000,000 CTC Mansfield Funding, 11.125% due
9/30/2016......................... 1,076,250 1,084,095
B B1 1,000,000 Midland Cogeneration Venture L.P.,
13.25% due 7/23/2006.............. 1,108,750 1,178,338
------------ ------------
2,185,000 2,262,433
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL CORPORATE BONDS-92.7% 84,041,124 87,784,894
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
[CAPTION]
<TABLE>
SHARES COMMON STOCK & WARRANTS
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------
DEFENSE 0.0% 195 ++Empire of Carolina, Inc. (b)........ 10,140 1,268
- -----------------------------------------------------------------------------------------------------------------------------
FINANCIAL 21,919 Southmark Corp. (b)................. 652,176 0
SERVICES-0.0%
- -----------------------------------------------------------------------------------------------------------------------------
FOOD & BEVERAGE-0.2% 17,824 Doskocil Companies, Inc............. 1,055,049 194,950
- -----------------------------------------------------------------------------------------------------------------------------
HIGH TECHNOLOGY-0.1% 30,351 ++Anacomp, Inc. (Warrants) (c)........ 40,000 79,671
- -----------------------------------------------------------------------------------------------------------------------------
HOTELS 8,216 ++Buckhead Corp. of America........... 20,540 20,540
CASINOS-0.1% 10,000 Goldriver Hotel & Casino Corp.
(Class B) (d)..................... 65,657 40,625
1,000 ++Goldriver Hotel & Casino Liquidating
Trust............................. 24,040 17,129
2,000 Trump Taj Mahal Holding Corp.
(Class A)......................... 1,000 45,500
------------ ------------
111,237 123,794
- -----------------------------------------------------------------------------------------------------------------------------
INDUSTRIAL-0.0% 315 Thermadyne Industries, Inc.
(Warrants) (c).................... 3,150 1,378
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL COMMON STOCKS &
WARRANTS-0.4% 1,871,752 401,061
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
39
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH SERIES FUND, INC.
High Yield Portfolio
Schedule of Investments as of December 31, 1993 (Concluded)
================================================================================
<TABLE>
<CAPTION>
SHARES VALUE
INDUSTRY HELD ISSUE COST (NOTE 1A)
- -----------------------------------------------------------------------------------------------------------------------------
PREFERRED STOCKS
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------
BROADCASTING & 7,895 K-III Communications Corp. (a)...... $ 810,107 $ 797,402
PUBLISHING-0.8%
- -----------------------------------------------------------------------------------------------------------------------------
FINANCIAL 1,114 Southmark Corp. (Series A) (b)...... 398,037 5,570
SERVICES-0.0%
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL PREFERRED STOCKS-0.8% 1,208,144 802,972
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
FACE AMOUNT ISSUE
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------
SHORT-TERM SECURITIES
- -----------------------------------------------------------------------------------------------------------------------------
COMMERCIAL $3,000,000 Bank One Diversified Holding Co.,
PAPER**-6.8% 3.20% due 1/28/1994................ 2,992,533 2,992,533
1,429,000 General Electric Capital Corp.,
3.22% due 1/03/1994................ 1,428,617 1,428,617
2,000,000 Preferred Receivables Funding Corp.,
3.30% due 1/05/1994................ 1,999,083 1,999,083
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL SHORT-TERM SECURITIES-6.8% 6.420,233 6,420,233
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS-100.7%............ $93,541,253 95,409,160
-----------
-----------
LIABILITIES IN EXCESS OF OTHER
ASSETS-(0.7%)....................... (669,776)
-----------
NET ASSETS-100.0%................... $94,739,384
-----------
-----------
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Represents the effective yield at time of purchase.
** Commercial Paper is traded on a discount basis; the interest rates shown are
the discount rates paid at the time of purchase by the Portfolio.
(a) Represents a Pay-in-Kind security which may pay interest/dividends in
additional face amount/shares.
(b) Non-income producing security.
(c) Warrants entitle the portfolio to purchase a predetermined number of shares
of common stock/face amount of bonds. The purchase price and number of
shares/face amount are subject to adjustments under certain conditions until
the expiration date.
(d) Each share contains a right which entitles the Portfolio to purchase a
predetermined number of shares of preferred stock. The purchase price and
number of shares are subject to adjustment.
+ Corresponding industry groups for convertible bonds:
(1) Food and Beverage
(2) Health Care
++ Restricted securities as to resale. The value of the Portfolio's investment
in restricted securities was approximately $4,276,000, representing 4.5% of
net assets.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
ISSUE ACQUISITION DATE COST (NOTE 1A)
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
Anacomp, Inc. (Warrants)............................................ 10/23/90 $ 40,000 $ 79,671
Buckhead Corp. of America (Common Stock)............................ 12/29/92 20,540 20,540
Coleman Holdings Inc., 11.09% due 5/27/1998......................... 10/07/93 778,440 809,375
Empire of Carolina, Inc. (Common Stock)............................. 6/16/87 to 5/22/90 10,140 1,268
Formica Corp., 15.75% due 10/01/2001................................ 6/03/93 673,711 708,750
Formica Corp., 13.125% due 9/15/2005................................ 11/09/93 1,003,750 1,015,625
Goldriver Hotel & Casino Liquidating Trust.......................... 8/31/92 24,040 17,129
Indspec Chemical Corp., 11.50% due 12/01/2003....................... 11/19/93 1,005,309 1,023,750
Page Mart, Inc. (with warrants), 12.25% due 11/01/2003.............. 10/12/93 556,288 600,000
- ------------------------------------------------------------------------------------------------------------------------
TOTAL $ 4,112,218 $ 4,276,108
----------- -----------
----------- -----------
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
Ratings of issues shown have not been audited by Deloitte & Touche.
See Notes to Financial Statements.
40
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH SERIES FUND, INC.
Intermediate Government Bond Portfolio
Schedule of Investments as of December 31, 1993
================================================================================
<TABLE>
<CAPTION>
FACE VALUE
AMOUNT ISSUE COST (NOTE 1A)
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------
US GOVERNMENT & AGENCY OBLIGATIONS
- ---------------------------------------------------------------------------------------------------------------------------
FEDERAL FARM CREDIT $ 5,000,000 Federal Farm Credit Bank, 8.65% due 10/01/1999.... $ 5,113,650 $ 5,732,650
BANK-2.0%
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL FEDERAL FARM CREDIT BANK 5,113,650 5,732,650
- ---------------------------------------------------------------------------------------------------------------------------
FEDERAL HOME Federal Home Loan Mortgage Corporation:
LOAN MORTGAGE 8,000,000 6.60% due 11/12/1999.............................. 7,901,250 8,420,440
CORPORATION-7.1% 6,000,000 6.55% due 1/04/2000............................... 6,102,840 6,288,486
5,000,000 7.90% due 9/19/2001............................... 5,000,000 5,624,565
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL FEDERAL HOME LOAN MORTGAGE CORPORATION 19,004,090 20,333,491
- ---------------------------------------------------------------------------------------------------------------------------
FEDERAL NATIONAL Federal National Mortgage Association:
MORTGAGE 9,000,000 9.20% due 9/11/2000............................... 9,392,500 10,758,141
ASSOCIATION-11.6% 7,000,000 6.80% due 1/10/2003............................... 6,990,156 7,389,361
15,000,000 5.80% due 12/10/2003.............................. 14,953,125 14,840,010
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL FEDERAL NATIONAL MORTGAGE ASSOCIATION 31,335,781 32,987,512
- ---------------------------------------------------------------------------------------------------------------------------
MORTGAGE-BACKED 1,219,756 Federal National Mortgage Association, 9.00% due
SECURITIES-0.5% 1/01/2002 (a).................................... 1,177,065 1,290,655
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL MORTGAGE-BACKED SECURITIES 1,177,065 1,290,655
- ---------------------------------------------------------------------------------------------------------------------------
PRIVATE EXPORT Private Export Funding Corporation:
FUNDING 7,000,000 8.35% due 1/31/2001............................... 7,083,590 8,116,017
CORPORATION-7.1% 10,000,000 8.75% due 6/30/2003............................... 10,410,681 12,134,410
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL PRIVATE EXPORT FUNDING CORPORATION 17,494,271 20,250,427
- ---------------------------------------------------------------------------------------------------------------------------
US TREASURY US Treasury Notes:
NOTES-68.2% 11,000,000 4.75% due 9/30/1998............................... 10,983,242 10,824,660
13,000,000 8.875% due 2/15/1999.............................. 14,712,344 15,096,120
16,000,000 6.00% due 10/15/1999.............................. 16,232,219 16,519,840
11,500,000 8.875% due 5/15/2000.............................. 14,030,000 13,620,255
20,000,000 8.75% due 8/15/2000............................... 23,590,625 23,612,400
21,000,000 8.50% due 11/15/2000.............................. 22,600,413 24,550,260
5,000,000 7.875% due 8/15/2001.............................. 5,645,313 5,692,150
23,000,000 7.50% due 11/15/2001.............................. 25,180,469 25,666,390
17,500,000 6.375% due 8/15/2002.............................. 18,620,780 18,254,600
12,000,000 6.25% due 2/15/2003............................... 12,030,405 12,397,440
14,000,000 5.75% due 8/15/2003............................... 13,939,520 13,956,180
10,000,000 10.75% due 8/15/2005.............................. 13,385,937 13,965,600
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL US TREASURY NOTES 190,951,267 194,155,895
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL US GOVERNMENT & AGENCY OBLIGATIONS-96.5% 265,076,124 274,750,630
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
41
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH SERIES FUND, INC.
Intermediate Government Bond Portfolio
Schedule of Investments as of December 31, 1993 (Concluded)
================================================================================
<TABLE>
<CAPTION>
VALUE
FACE AMOUNT ISSUE COST (NOTE 1A)
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------
SHORT-TERM SECURITIES
- ---------------------------------------------------------------------------------------------------------------------------
REPURCHASE $ 4,980,000 Bankers Trust Corp., purchased on
AGREEMENTS-1.8%* 12/31/1993 to yield 3.25% to 1/03/1994.......... $ 4,980,000 $ 4,980,000
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL SHORT-TERM SECURITIES-1.8% 4,980,000 4,980,000
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS-98.3%........................... $ 270,056,124 279,730,630
-------------
-------------
OTHER ASSETS LESS LIABILITIES-1.7%................ 4,764,396
-------------
NET ASSETS-100.0%................................. $ 284,495,026
-------------
-------------
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) US Government Agency Mortgage-Backed Obligations are subject to principal
paydowns as a result of prepayments or refinancings of the underlying
mortgage instrument. As a result, the average life may be substantially less
than the original maturity.
* Repurchase Agreements are fully collateralized by US Government Obligations.
See Notes to Financial Statements.
42
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH SERIES FUND, INC.
Long Term Corporate Bond Portfolio
Schedule of Investments as of December 31, 1993
================================================================================
<TABLE>
<CAPTION>
S&P MOODY'S VALUE
RATING RATING FACE AMOUNT ISSUE COST (NOTE 1A)
<S> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------
US GOVERNMENT & AGENCY OBLIGATIONS
- -----------------------------------------------------------------------------------------------------------------------------
FEDERAL AGENCIES-0.8% AAA Aaa $ 1,000,000 Federal Home Loan Mortgage Corp.,
7.90% due 9/19/2001............. $ 1,000,000 $ 1,124,913
- -----------------------------------------------------------------------------------------------------------------------------
US TREASURY NOTES US Treasury Notes & Bonds:
& BONDS-16.4% NR Aaa 3,000,000 8.25% due 7/15/1998.............. 3,379,219 3,376,860
NR Aaa 1,500,000 6.00% due 10/15/1999............. 1,552,500 1,548,735
NR Aaa 1,000,000 8.75% due 8/15/2000.............. 1,189,844 1,180,620
NR Aaa 1,000,000 6.375% due 8/15/2002............. 1,045,313 1,043,120
NR Aaa 4,000,000 5.75% due 8/15/2003.............. 3,982,720 3,987,480
NR Aaa 5,000,000 7.875% due 2/15/2021............. 5,532,812 5,823,400
NR Aaa 4,000,000 8.00% due 11/15/2021............. 4,068,125 4,738,720
NR Aaa 1,000,000 7.125% due 2/15/2023............. 1,128,906 1,082,490
------------- -------------
21,879,439 22,781,425
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL US GOVERNMENT & AGENCY
OBLIGATIONS-17.2% 22,879,439 23,906,338
- -----------------------------------------------------------------------------------------------------------------------------
INDUSTRY CORPORATE BONDS & NOTES
- -----------------------------------------------------------------------------------------------------------------------------
BANKING-10.2% A- A3 2,000,000 First Interstate Bancorp, 11.00%
due 3/05/1998................... 2,402,040 2,371,996
A- A3 2,000,000 Golden West Financial Corp.,
7.875% due 1/15/2002............ 2,010,240 2,184,140
A- A3 2,000,000 Huntington National Bank, 7.625%
due 1/15/2003................... 2,133,320 2,153,854
A A2 2,000,000 Norwest Corp., 6.625% due
3/15/2003....................... 1,999,810 2,039,006
A- A3 2,000,000 Society National Bank, Inc.,
6.75% due 6/15/2003............. 2,032,760 2,046,500
A- Baa1 1,000,000 U.S. Bancorp, 7.00% due
3/15/2003....................... 997,500 1,035,772
A A2 2,000,000 World Savings & Loan Association,
9.90% due 7/01/2000............. 2,072,740 2,353,066
------------- -------------
13,648,410 14,184,334
- -----------------------------------------------------------------------------------------------------------------------------
FINANCIAL SERVICES- A A2 1,000,000 Ford Motor Credit Corp., 6.75%
CAPTIVE-0.7% due 8/15/2008................... 994,150 994,072
- -----------------------------------------------------------------------------------------------------------------------------
FINANCIAL SERVICES- American General Finance Corp.,
CONSUMER-5.1% A+ A1 3,000,000 7.45% due 7/01/2002.............. 2,993,400 3,220,092
Associates Corp. of North
America:
AA- A1 2,500,000 8.80% due 8/01/1998.............. 2,817,275 2,822,270
AA- A1 1,000,000 6.75% due 10/15/1999............. 1,040,610 1,043,553
------------- -------------
6,851,285 7,085,915
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
43
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH SERIES FUND, INC.
Long Term Corporate Bond Portfolio
Schedule of Investments as of December 31, 1993 (Continued)
================================================================================
<TABLE>
<CAPTION>
S&P MOODY'S VALUE
INDUSTRY RATING RATING FACE AMOUNT ISSUE COST (NOTE 1A)
<S> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------
CORPORATE BONDS & NOTES (CONTINUED)
- -----------------------------------------------------------------------------------------------------------------------------
FINANCIAL SERVICES- Dean Witter, Discover & Co.:
OTHER-7.1% A A3 $ 1,000,000 6.875% due 3/01/2003............. $ 1,029,860 $ 1,024,195
A A3 1,000,000 6.75% due 10/15/2013............. 966,720 948,031
AAA Aaa 1,000,000 General Electric Capital Corp.,
8.70% due 2/15/2003............. 1,211,050 1,168,061
A1 A+ 1,000,000 Morgan Stanley Group, Inc., 7.00%
due 10/01/2013.................. 1,015,340 974,599
BBB+ A3 3,000,000 PaineWebber Group, Inc., 9.25%
due 12/15/2001.................. 3,507,900 3,470,964
A+ A3 2,000,000 Torchmark Corp., 9.625% due
5/01/1998....................... 1,952,770 2,301,606
------------- -------------
9,683,640 9,887,456
- -----------------------------------------------------------------------------------------------------------------------------
FOREIGN+-8.5% A2 A+ 1,000,000 CRA Finance Ltd., 6.50% due
12/01/2003(1)................... 998,500 998,910
A+ A1 1,000,000 Hydro-Quebec, 8.40% due
1/15/2022(2).................... 1,118,270 1,120,040
AAA Aaa 2,000,000 Japan Finance Corp. for Municipal
Enterprises, 8.70% due
7/30/2001(3).................... 2,237,380 2,332,942
A+ A1 3,500,000 Korea Development Bank, 6.25% due
5/01/2000(3).................... 3,518,760 3,501,414
A+ A1 750,000 Korea Electric Power, 7.75% due
4/01/2013(2).................... 767,580 769,573
Province of Quebec (Canada)(4):
A+ A1 1,000,000 7.50% due 7/15/2002.............. 1,076,020 1,069,346
A+ A1 1,500,000 13.00% due 10/01/2013............ 1,959,060 1,991,777
------------- -------------
11,675,570 11,784,002
- -----------------------------------------------------------------------------------------------------------------------------
INDUSTRIAL- Bass America, Inc.:
CONSUMER-11.7% A+ A1 1,000,000 6.75% due 8/01/1999.............. 1,009,090 1,042,077
A+ A1 2,500,000 8.125% due 3/31/2002............. 2,502,640 2,769,375
A+ A2 2,000,000 Dillard Department Stores, Inc.,
7.85% due 10/01/2012............ 1,928,620 2,165,672
Grand Metropolitan Investment
Corp.:
A+ A2 1,000,000 6.50% due 9/15/1999.............. 1,000,000 1,033,288
A+ A2 1,000,000 8.625% due 8/15/2001............. 1,047,750 1,150,171
A+ A2 1,500,000 9.00% due 8/15/2011.............. 1,544,205 1,787,315
A A2 2,000,000 Philip Morris Cos., Inc., 9.00%
due 1/01/2001(a)................ 2,084,740 2,309,122
AA Aa1 3,500,000 Wal-Mart Stores Inc., 8.625% due
4/01/2001....................... 3,488,100 4,069,817
------------- -------------
14,605,145 16,326,837
- -----------------------------------------------------------------------------------------------------------------------------
INDUSTRIAL- A+ A1 2,000,000 Atlantic Richfield Co., 10.375%
ENERGY-4.7% due 7/15/1995................... 2,107,950 2,178,802
AA- A1 2,000,000 BP America Inc., 7.875% due
5/15/2002....................... 2,110,760 2,210,514
Texaco Capital Inc.:
A+ A1 1,000,000 6.875% due 7/15/1999............. 998,060 1,053,635
A+ A1 1,000,000 8.00% due 8/01/2032.............. 969,730 1,101,910
------------- -------------
6,186,500 6,544,861
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
44
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH SERIES FUND, INC.
Long Term Corporate Bond Portfolio
Schedule of Investments as of December 31, 1993 (Continued)
================================================================================
<TABLE>
<CAPTION>
S&P MOODY'S VALUE
INDUSTRY RATING RATING FACE AMOUNT ISSUE COST (NOTE 1A)
<S> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------
CORPORATE BONDS & NOTES (CONCLUDED)
- -----------------------------------------------------------------------------------------------------------------------------
INDUSTRIAL- AA- Aa2 $ 2,000,000 Archer-Daniels-Midland Co., 6.25%
OTHER-12.4% due 5/15/2003................... $ 1,989,000 $ 2,022,520
A- A3 1,000,000 Baxter International Inc., 8.125%
due 11/15/2001.................. 992,470 1,110,531
A+ A1 3,000,000 Capital Cities/ABC, Inc. 8.875%
due 12/15/2000.................. 3,211,080 3,509,088
A A2 2,000,000 Communications Satellite Corp.,
8.125% due 4/01/2004............ 2,045,900 2,245,556
A- A3 2,000,000 Equifax, Inc., 6.50% due
6/15/2003....................... 1,989,800 2,011,068
A A3 1,000,000 First Data Corp., 6.625% due
4/01/2003....................... 1,035,250 1,015,322
AA- Aa3 1,000,000 Gannett Co., Inc. 5.25% due
3/01/1998....................... 996,820 999,268
AA Aa2 1,000,000 Kaiser Foundation Hospital, 9.00%
due 11/01/2001.................. 1,146,180 1,172,356
A A2 3,000,000 Weyerhaeuser Corp., 7.50% due
3/01/2013....................... 3,000,000 3,159,903
------------- -------------
16,406,500 17,245,612
- -----------------------------------------------------------------------------------------------------------------------------
SUPRANATIONAL-4.1% AAA Aaa 1,500,000 Asian Development Bank, 10.75%
due 6/01/1997................... 1,580,525 1,764,935
AAA Aaa 1,000,000 Inter-American Development Bank
Co., 8.50% due 3/15/2011........ 1,012,470 1,187,832
AAA Aaa 2,000,000 International Bank for
Reconstruction & Development,
12.375% due 10/15/2002.......... 2,432,280 2,827,186
------------- -------------
5,025,275 5,779,953
- -----------------------------------------------------------------------------------------------------------------------------
TRANSPORT Southwest Airlines, Inc.:
SERVICES-2.5% A- Baa1 2,000,000 9.40% due 7/01/2001.............. 2,407,120 2,353,712
A- Baa1 1,000,000 7.875% due 9/01/2007............. 998,750 1,086,883
------------- -------------
3,405,870 3,440,595
- -----------------------------------------------------------------------------------------------------------------------------
UTILITIES- AA- Aa3 3,000,000 Pacific Bell, Inc., 7.25% due
COMMUNICATIONS-3.0% 7/01/2002....................... 2,985,420 3,211,260
A+ A1 1,000,000 Southwestern Bell
Telecommunications Corp., 6.125%
due 3/01/2000................... 1,005,000 1,016,562
------------- -------------
3,990,420 4,227,822
- -----------------------------------------------------------------------------------------------------------------------------
UTILITIES- A A1 3,000,000 Pacific Gas & Electric Co.,
ELECTRIC-5.0% 7.875% due 3/01/2002............ 2,993,760 3,308,538
A A2 3,000,000 Pennsylvania Power & Light Co.,
6.875% due 2/01/2003............ 3,043,050 3,105,075
A A2 500,000 Virginia Electric & Power Co.,
6.625% due 4/01/2003............ 499,450 512,868
------------- -------------
6,536,260 6,926,481
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
45
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH SERIES FUND, INC.
Long Term Corporate Bond Portfolio
Schedule of Investments as of December 31, 1993 (Concluded)
================================================================================
<TABLE>
<CAPTION>
VALUE
FACE AMOUNT ISSUE COST (NOTE 1A)
<S> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------
UTILITIES- Consolidated Natural Gas Co.:
GAS-1.9% AA- A1 $ 1,500,000 8.75% due 6/01/1999.............. $ 1,512,720 $ 1,710,508
AA- A1 1,000,000 5.75% due 8/01/2003.............. 996,950 967,392
------------- -------------
2,509,670 2,677,900
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL CORPORATE BONDS &
NOTES-76.9%..................... 101,518,695 107,105,840
- -----------------------------------------------------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS
- -----------------------------------------------------------------------------------------------------------------------------
COMMERCIAL PAPER-1.1%* 1,500,000 General Electric Capital Corp.,
3.35% to 1/05/1994.............. 1,499,302 1,499,302
- -----------------------------------------------------------------------------------------------------------------------------
REPURCHASE 4,954,000 Bankers Trust Co., purchased on
AGREEMENTS-3.5%** 12/31/1993 to yield 3.25% to
1/03/1994....................... 4,954,000 4,954,000
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL SHORT-TERM INVESTMENTS-4.6% 6,453,302 6,453,302
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS-98.7%.......... $ 130,851,436 137,465,480
-------------
-------------
OTHER ASSETS LESS
LIABILITIES-1.3%................. 1,855,282
-------------
NET ASSETS -- 100.0%............. $ 139,320,762
-------------
-------------
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Commercial Paper is traded on a discount basis; the interest rates shown
are the discount rates paid at the time of purchase by the Portfolio.
** Repurchase Agreements are fully collateralized by US Government
Obligations.
(a) Medium-Term Note.
+ Corresponding industry groups for foreign bonds:
(1) Industrial Mining.
(2) Electric Utility.
(3) Financial Institution.
(4) Government Entity.
Ratings of issues shown have not been audited by Deloitte & Touche.
See Notes to Financial Statements.
46
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH SERIES FUND, INC.
Money Reserve Portfolio
Schedule of Investments as of December 31, 1993
================================================================================
<TABLE>
<CAPTION>
INTEREST MATURITY VALUE
FACE AMOUNT ISSUE RATE* DATE (NOTE 1A)
<S> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------
BANK NOTES-4.6% $ 5,000,000 FNB of Chicago.............................. 3.35% 1/31/94 $ 4,999,983
10,000,000 FNB of Chicago.............................. 3.55 5/25/94 10,005,700
10,000,000 NationsBank Corp., N.C...................... 3.65 6/21/94 10,010,065
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL BANK NOTES
(COST-$25,008,080) 25,015,748
- -----------------------------------------------------------------------------------------------------------------------------
COMMERCIAL PAPER- 800,000 ABN-AMRO North America Finance, Inc......... 3.22 1/12/94 799,120
56.7% 3,000,000 ABN-AMRO North America Finance, Inc......... 3.32 1/24/94 2,993,300
10,000,000 APRECO, Inc................................. 3.28 3/11/94 9,937,778
10,000,000 Abbey National North America Corp........... 3.28 1/10/94 9,990,833
6,800,000 American Express Credit Corp................ 3.22 1/11/94 6,793,143
5,000,000 Arco Coal Australia, Inc.................... 3.33 2/07/94 4,982,214
5,000,000 Atlantic Richfield Co....................... 3.18 3/10/94 4,969,333
8,000,000 Australian Wool Realization Commission...... 3.20 1/19/94 7,985,856
20,000,000 Beta Finance Inc............................ 3.21 2/23/94 19,900,400
10,000,000 CIT Group Holdings, Inc.(The)............... 3.50 3/29/94 9,921,778
8,900,000 CSW Credit, Inc............................. 3.35 2/11/94 8,865,008
2,677,000 CXC Inc..................................... 3.23 2/01/94 2,669,314
11,026,000 Canadian Wheat Board........................ 3.22 3/29/94 10,939,752
8,600,000 Central & South West Corp................... 3.35 2/04/94 8,571,990
5,220,000 Central & South West Corp................... 3.36 2/04/94 5,202,948
4,000,000 Ciesco L.P. ................................ 3.20 2/08/94 3,986,133
15,000,000 Ford Motor Credit Co........................ 3.20 1/27/94 14,962,313
10,000,000 Ford Motor Credit Co........................ 3.22 3/08/94 9,940,444
10,000,000 General Electric Capital Corp............... 3.35 3/23/94 9,927,111
20,000,000 Generale Bank, Inc.......................... 3.34 2/18/94 19,909,622
15,000,000 Goldman Sachs Group L.P..................... 3.35 2/04/94 14,950,854
4,650,000 Hanson Finance (UK) PLC..................... 3.21 2/02/94 4,635,635
6,885,000 Hertz Funding Corp.......................... 3.37 1/21/94 6,871,546
4,000,000 Hertz Funding Corp.......................... 3.34 2/11/94 3,984,273
5,000,000 Kingdom of Sweden........................... 3.23 1/21/94 4,990,702
5,000,000 NationsBank Corp............................ 3.35 4/05/94 4,957,118
3,500,000 Nomura Holding America Inc.................. 3.37 1/24/94 3,492,183
10,000,000 Nomura Holding America Inc.................. 3.40 1/24/94 9,977,667
1,784,000 Preferred Receivables Funding Corp.......... 3.23 2/01/94 1,778,878
4,000,000 Preferred Receivables Funding Corp.......... 3.23 2/14/94 3,983,850
5,225,000 Preferred Receivables Funding Corp.......... 3.28 2/18/94 5,201,389
1,620,000 Sanwa Business Credit Corp.................. 3.25 2/24/94 1,611,783
10,020,000 Sanwa Business Credit Corp.................. 3.23 3/22/94 9,947,856
10,000,000 Societe Generale North America, Inc......... 3.23 2/28/94 9,945,589
8,000,000 Student Loan Corp........................... 3.33 1/31/94 7,977,060
15,400,000 Svenska Handelsbanken, Inc.................. 3.25 1/05/94 15,392,942
10,000,000 Svenska Handelsbanken, Inc.................. 3.30 3/10/94 9,938,667
7,000,000 Transamerica Finance Corp................... 3.36 2/22/94 6,965,786
10,000,000 Transamerica Finance Corp................... 3.35 3/02/94 9,945,778
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL COMMERCIAL PAPER
(COST-$309,786,423) 309,797,946
- -----------------------------------------------------------------------------------------------------------------------------
CORPORATE NOTES- 1,000,000 Associates Corp. of North America........... 9.00 1/15/94 1,002,828
0.3% 500,000 Associates Corp. of North America........... 9.90 3/01/94 505,902
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL CORPORATE NOTES (COST-$1,506,799) 1,508,730
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
47
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH SERIES FUND, INC.
Money Reserve Portfolio
Schedule of Investments as of December 31, 1993 (Concluded)
================================================================================
<TABLE>
<CAPTION>
INTEREST MATURITY VALUE
FACE AMOUNT ISSUE RATE* DATE (NOTE 1A)
<S> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------
MASTER NOTES- $ 3,000,000 Bear Stearns Co., Inc. (The)+............... 3.34% 5/23/94 $ 3,000,000
5.7% 8,000,000 Goldman Sachs Group, L.P.+.................. 3.33 3/01/94 8,000,000
20,000,000 Kingdom of Sweden+.......................... 3.188 7/15/94 20,000,000
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL MASTER NOTES (COST-$31,000,000) 31,000,000
- -----------------------------------------------------------------------------------------------------------------------------
MEDIUM-TERM 14,000,000 General Electric Capital Corp............... 3.50 8/25/94 13,994,400
NOTES-2.5%
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL MEDIUM-TERM NOTES (COST-$13,996,373) 13,994,400
- -----------------------------------------------------------------------------------------------------------------------------
US GOVERNMENT, 5,867,000 Federal Home Loan Mortgage.................. 3.12 1/24/94 5,854,562
AGENCY & 170,000 Federal National Mortgage Association....... 3.26 5/02/94 168,151
INSTRUMENTALITY 170,000 Federal National Mortgage Association....... 3.34 9/22/94 165,745
OBLIGATIONS-DISCOUNT-
1.1%
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL US GOVERNMENT, AGENCY & INSTRUMENTALITY
OBLIGATIONS-DISCOUNT (COST-$6,188,739) 6,188,458
- -----------------------------------------------------------------------------------------------------------------------------
US GOVERNMENT, 3,000,000 Federal Home Loan Bank+..................... 3.43 6/21/95 3,000,000
AGENCY & 3,000,000 Federal Home Loan Bank+..................... 3.33 8/09/95 3,000,000
INSTRUMENTALITY 6,000,000 Federal Home Loan Bank+..................... 3.43 12/28/95 6,000,000
OBLIGATIONS- 6,000,000 Federal Home Loan Bank+..................... 3.46 6/17/96 6,000,000
NON-DISCOUNT-28.9% 2,000,000 Federal Home Loan Bank+..................... 3.46 6/21/96 2,000,000
3,000,000 Federal Home Loan Mortgage+................. 3.33 8/09/95 3,000,000
29,000,000 Federal Home Loan Mortgage+................. 3.36 9/01/95 29,000,000
5,000,000 Federal Home Loan Mortgage+................. 3.37 9/01/95 5,000,000
5,000,000 Federal National Mortgage Association+...... 2.92 7/08/94 5,000,000
8,000,000 Federal National Mortgage Association+...... 3.33 5/13/96 8,000,000
5,000,000 Federal National Mortgage Association+...... 3.33 5/24/96 5,000,000
8,000,000 Federal National Mortgage Association+...... 3.45 5/19/97 8,000,000
8,000,000 Federal National Mortgage Association+...... 3.50 5/14/98 8,000,000
2,000,000 Student Loan Marketing Association+......... 3.89 2/04/94 2,001,225
5,000,000 Student Loan Marketing Association+......... 3.195 2/10/94 4,999,542
2,000,000 Student Loan Marketing Association+......... 3.42 12/30/94 2,004,512
10,000,000 Student Loan Marketing Association+......... 3.48 1/14/97 10,000,000
10,000,000 US Treasury Notes........................... 5.375 2/28/94 10,036,270
5,000,000 US Treasury Notes........................... 5.125 5/31/94 5,037,500
5,000,000 US Treasury Notes........................... 5.00 6/30/94 5,040,625
5,000,000 US Treasury Notes........................... 3.875 3/31/95 5,001,560
5,000,000 US Treasury Notes........................... 3.875 4/30/95 5,000,000
1,250,000 US Treasury Notes........................... 4.125 6/30/95 1,253,125
7,500,000 US Treasury Notes........................... 3.875 8/31/95 7,478,902
5,000,000 US Treasury Notes........................... 3.875 9/30/95 4,982,810
4,250,000 US Treasury Notes........................... 4.25 12/31/95 4,251,326
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL US GOVERNMENT AGENCY & INSTRUMENTALITY
OBLIGATIONS-NON-DISCOUNT (COST-$158,094,725) 158,087,397
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS
(COST-$545,581,139)-99.80%.................. 545,592,679
OTHER ASSETS LESS LIABILITIES-0.20%......... 1,117,463
-------------
NET ASSETS-100.00%.......................... $ 546,710,142
-------------
-------------
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Bankers' Acceptances, Commercial Paper and certain US Government Agency
Obligations are traded on a discount basis; the interest rates shown are the
discount rates paid at the time of purchase by the Portfolio. Other securities
bear interest at the rates shown, payable at fixed dates or upon maturity.
Interest rates on variable rate securities are adjusted periodically based on
appropriate indexes. The interest rates shown are the rates in effect at
December 31, 1993.
+ Variable Rate Notes.
See Notes to Financial Statements.
48
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH SERIES FUND, INC.
Multiple Strategy Portfolio
Schedule of Investments as of December 31, 1993
================================================================================
<TABLE>
<CAPTION>
SHARES VALUE PERCENT OF
INDUSTRY HELD US STOCKS COST (NOTE 1A) NET ASSETS
<S> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------
AEROSPACE 225,000 AlliedSignal Inc............... $ 13,738,604 $ 17,775,000 1.4%
- --------------------------------------------------------------------------------------------------------------------------
APPAREL 350,000 Phillips-Van Heusen Corp....... 8,501,207 13,125,000 1.1
- --------------------------------------------------------------------------------------------------------------------------
APPLIANCES 900,000 Singer Co...................... 23,605,557 33,637,500 2.7
825,500 Sunbeam-Oster.................. 16,414,991 18,161,000 1.5
-------------- -------------- ----------
40,020,548 51,798,500 4.2
- --------------------------------------------------------------------------------------------------------------------------
AUTOMOTIVE 275,000 Consorcio G Grupo Dina, S.A. de
EQUIPMENT C.V. (ADR)(a)................. 4,588,824 7,665,625 0.6
550,000 Cooper Tire and Rubber Co. .... 7,166,211 13,750,000 1.1
375,000 Ford Motor Co. ................ 20,726,900 24,187,500 1.9
150,000 Magna International, Inc. ..... 6,567,510 7,462,500 0.6
-------------- -------------- ----------
39,049,445 53,065,625 4.2
- --------------------------------------------------------------------------------------------------------------------------
BANKING 400,000 Bank of New York, Inc. ........ 17,274,427 22,800,000 1.8
115,000 +Bank of New York, Inc.
(Warrants)(b)................. 863,281 1,207,500 0.1
-------------- -------------- ----------
18,137,708 24,007,500 1.9
- --------------------------------------------------------------------------------------------------------------------------
BEVERAGES 50,000 Panamerican Beverages, Inc. ... 1,539,541 1,912,500 0.2
100,000 PepsiCo Inc.................... 3,975,630 4,087,500 0.3
-------------- -------------- ----------
5,515,171 6,000,000 0.5
- --------------------------------------------------------------------------------------------------------------------------
CHEMICALS 160,000 PPG Industries, Inc............ 11,611,791 12,140,000 1.0
180,000 Rohm and Haas.................. 9,787,611 10,710,000 0.9
-------------- -------------- ----------
21,399,402 22,850,000 1.9
- --------------------------------------------------------------------------------------------------------------------------
COMMUNICATION 460,000 ADC Telecommunication Inc...... 12,158,786 16,387,500 1.3
EQUIPMENT 87,700 ALC Communication Corp......... 2,236,350 2,521,375 0.2
14,000 Antec Corporation.............. 252,000 343,000 0.0
250,000 DSC Communication Corp......... 13,552,366 15,359,375 1.2
375,420 LDDS Communication
(Class A)..................... 16,571,928 18,207,870 1.5
800,000 MCI Communication Co. ......... 22,595,338 22,550,000 1.8
80,000 Motorola, Inc. ................ 4,813,450 7,390,000 0.6
60,000 Picturetel Corp................ 1,087,357 1,117,500 0.1
250,000 Tellabs, Inc. ................. 8,364,482 11,750,000 0.9
100,000 Sprint Corp.................... 3,723,100 3,475,000 0.3
-------------- -------------- ----------
85,355,157 99,101,620 7.9
- --------------------------------------------------------------------------------------------------------------------------
COMPUTER SERVICES 235,100 +Computer Sciences Corp......... 18,858,297 23,392,450 1.9
540,000 General Motors Corp.
(Class E)..................... 16,188,094 15,795,000 1.3
100,000 Microsoft Corp. ............... 8,376,221 8,062,500 0.7
-------------- -------------- ----------
43,422,612 47,249,950 3.9
- --------------------------------------------------------------------------------------------------------------------------
COMPUTER TECHNOLOGY 245,000 Solectron Corp................. 5,922,674 6,951,875 0.6
- --------------------------------------------------------------------------------------------------------------------------
ELECTRICAL EQUIPMENT 300,000 Emerson Electric Co............ 16,310,335 18,075,000 1.5
- --------------------------------------------------------------------------------------------------------------------------
ELECTRIC UTILITIES 500,000 California Energy Inc.......... 8,941,083 9,250,000 0.7
- --------------------------------------------------------------------------------------------------------------------------
ENGINEERING & 262,500 Thermo Electron................ 10,711,899 11,025,000 0.9
CONSTRUCTION
- --------------------------------------------------------------------------------------------------------------------------
ENVIRONMENTAL CONTROL 1,600,000 Wheelabrator Technologies,
Inc. ......................... 19,656,504 28,400,000 2.3
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
49
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH SERIES FUND, INC.
Multiple Strategy Portfolio
Schedule of Investments as of December 31, 1993 (Continued)
================================================================================
<TABLE>
<CAPTION>
SHARES VALUE PERCENT OF
INDUSTRY HELD US STOCKS COST (NOTE 1A) NET ASSETS
<S> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------
FOREST PRODUCTS 325,000 Willamette Industries, Inc..... $ 11,694,343 $ 16,168,750 1.3%
- --------------------------------------------------------------------------------------------------------------------------
HEALTH 400,000 Humana Inc..................... 6,705,601 7,050,000 0.6
115,000 Johnson and Johnson Co. ....... 4,598,582 5,146,250 0.4
350,000 Physician Corp................. 6,809,163 8,706,250 0.7
150,000 +Vivra Inc. .................... 2,784,041 3,468,750 0.3
-------------- -------------- ----------
20,897,387 24,371,250 2.0
- --------------------------------------------------------------------------------------------------------------------------
HOUSEHOLD PRODUCTS 300,000 Procter and Gamble............. 16,617,087 17,100,000 1.4
- --------------------------------------------------------------------------------------------------------------------------
INSURANCE 35,000 America International Group
Inc. ......................... 3,094,434 3,071,250 0.2
200,000 Capital Holding Corp. ......... 8,211,266 7,425,000 0.6
-------------- -------------- ----------
11,305,700 10,496,250 0.8
- --------------------------------------------------------------------------------------------------------------------------
MEDIA/PUBLISHING 300,000 News Corp...................... 15,691,685 15,825,000 1.3
- --------------------------------------------------------------------------------------------------------------------------
MERCHANDISING 100,000 Heilig-Meyers Co. PLC
(ADR)(a)...................... 1,350,946 3,900,000 0.3
- --------------------------------------------------------------------------------------------------------------------------
OFFICE EQUIPMENT 350,000 Danka Business Systems Inc..... 8,360,292 13,846,875 1.1
- --------------------------------------------------------------------------------------------------------------------------
PAPER & PACKAGING 500,000 +Crown Cork & Seal Co., Inc..... 7,738,866 20,937,500 1.7
70,000 Union Camp Corp................ 3,347,099 3,333,750 0.3
-------------- -------------- ----------
11,085,965 24,271,250 2.0
- --------------------------------------------------------------------------------------------------------------------------
PETROLEUM- 125,000 Chevron Corp................... 10,942,053 10,890,625 0.9
INTERNATIONAL 30,000 Mobil Corp. ................... 2,358,265 2,370,000 0.2
375,000 Phillips Petroleum Co. ........ 10,919,138 10,875,000 0.9
-------------- -------------- ----------
24,219,456 24,135,625 2.0
- --------------------------------------------------------------------------------------------------------------------------
PRINTING & PUBLISHING 150,000 Gannett Co..................... 7,641,674 8,587,500 0.7
- --------------------------------------------------------------------------------------------------------------------------
RAILROADS 35,000 CSX Corp. ..................... 2,953,415 2,835,000 0.2
60,200 Southern Pacific Rail Corp..... 1,174,261 1,188,950 0.1
-------------- -------------- ----------
4,127,676 4,023,950 0.3
- --------------------------------------------------------------------------------------------------------------------------
SERVICES 125,000 Block (H&R), Inc............... 3,688,344 5,093,750 0.4
180,025 Kelly Services, Inc. (Class A)
(Non-Voting).................. 5,243,796 4,973,190 0.4
-------------- -------------- ----------
8,932,140 10,066,940 0.8
- --------------------------------------------------------------------------------------------------------------------------
TIRE & RUBBER 67,500 Bandag, Inc. .................. 2,728,506 3,737,812 0.3
149,200 Bandag, Inc. (Class A)......... 7,607,300 7,721,100 0.6
-------------- -------------- ----------
10,335,806 11,458,912 0.9
- --------------------------------------------------------------------------------------------------------------------------
TOTAL US STOCKS 488,942,506 592,927,372 47.9
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
COUNTRY FOREIGN STOCKS & WARRANTS
<S> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------
ARGENTINA 106,030 Banco de Galicia y Buenos Aires
S.A. (ADR)(a)(3).............. 2,080,350 4,261,081 0.3
75,600 Banco Frances del Rio de la
Plata S.A. (ADR)(a)(3)........ 2,313,360 2,976,750 0.2
800,000 Telecom Argentina S.A. (Class
B) (Ordinary)(19)............. 3,837,940 5,034,068 0.4
-------------- -------------- ----------
8,231,650 12,271,899 0.9
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
50
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH SERIES FUND, INC.
Multiple Strategy Portfolio
Schedule of Investments as of December 31, 1993 (Continued)
================================================================================
<TABLE>
<CAPTION>
SHARES VALUE PERCENT OF
COUNTRY HELD FOREIGN STOCKS & WARRANTS COST (NOTE 1A) NET ASSETS
<S> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------
AUSTRALIA 300,000 +Coles Myer Ltd.
(Warrants)(b)(19)............. $ 896,844 $ 645,444 0.1%
338,370 National Australia Bank
Ltd. (3)...................... 2,108,736 2,829,309 0.2
367,561 Pacific Dunlop, Ltd. (12)...... 1,379,974 1,347,106 0.1
-------------- -------------- ----------
4,385,554 4,821,859 0.4
- --------------------------------------------------------------------------------------------------------------------------
CANADA 75,000 Hudson Bay Co.(16)............. 2,293,862 2,237,538 0.2
400,000 International Semi-Tech
Microelectronics Inc.
(Receipts)(7)++............... 2,584,007 2,265,861 0.2
-------------- -------------- ----------
4,877,869 4,503,399 0.4
- --------------------------------------------------------------------------------------------------------------------------
CHILE 136,400 Distribuidora Chilectra
Metropolitana
S.A. (ADR)(a)(7)++............ 3,929,378 5,600,584 0.5
- --------------------------------------------------------------------------------------------------------------------------
FRANCE 5,358 +Compagnie Generale des
Eaux (7)...................... 2,002,292 2,647,749 0.2
- --------------------------------------------------------------------------------------------------------------------------
GERMANY 3,000 Mannesmann AG (11)............. 514,933 729,077 0.1
- --------------------------------------------------------------------------------------------------------------------------
HONG KONG 60,000 Cheung Kong Holdings (9)....... 216,163 367,085 0.0
1,543,041 Dairy Farms International
Holdings (8).................. 2,666,001 3,076,891 0.3
350,000 Henderson Land
Development (8)............... 1,105,930 2,583,193 0.2
1,500,000 Hong Kong Land, Ltd. (14)...... 2,918,109 5,321,766 0.4
686,954 HSBC Holdings PLC (3).......... 3,623,868 10,229,148 0.8
2,736,000 Hutchison Whampoa Co. (14)..... 5,304,775 13,639,259 1.1
1,700,000 Johnson Electrical
Holdings Ltd. (7)............. 3,387,675 4,358,410 0.4
1,000,000 Swire Pacific, Ltd. (Class
A)(14)........................ 3,811,431 8,999,094 0.7
-------------- -------------- ----------
23,033,952 48,574,846 3.9
- --------------------------------------------------------------------------------------------------------------------------
MEXICO 2,715,000 Cifra, S.A. de C.V. (19)....... 2,377,961 8,149,372 0.7
450,000 Empresas ICA Sociedad
Controladora, S.A. de C.V.
(ADR)(a)(7)................... 8,887,921 12,712,500 1.0
960,000 +Grupo Carso, S.A. de C.V.
(ADR)(a)(14)++................ 8,031,744 20,880,000 1.7
175,000 Grupo Fina Seffin Co.
(ADR)(a)(3)................... 4,326,060 5,162,500 0.4
150,000 Telefonos de Mexico, S.A. de
C.V. (ADR)(a)(19)............. 7,262,510 10,125,000 0.8
1,625,000 Telefonos de Mexico, S.A. de
C.V. (Class A)(21)............ 2,515,263 5,469,002 0.4
4,600,000 Telefonos de Mexico, S.A. de
C.V. (Class L)(21)............ 8,849,263 15,481,481 1.3
100,000 Transportacion Maritima
Mexicana, S.A. de C.V.
(ADR)(a)(2)................... 934,108 1,025,000 0.1
-------------- -------------- ----------
43,184,830 79,004,855 6.4
- --------------------------------------------------------------------------------------------------------------------------
NETHERLANDS 171,305 Aegon N.V. (12)................ 7,005,345 9,307,178 0.8
150,000 Royal Dutch Petroleum Co. N.V.
(ADR)(a)(8)................... 12,736,881 15,656,250 1.3
-------------- -------------- ----------
19,742,226 24,963,428 2.1
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
51
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH SERIES FUND, INC.
Multiple Strategy Portfolio
Schedule of Investments as of December 31, 1993 (Continued)
================================================================================
<TABLE>
<CAPTION>
SHARES VALUE PERCENT OF
COUNTRY HELD FOREIGN STOCKS & WARRANTS COST (NOTE 1A) NET ASSETS
<S> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------
PORTUGAL 114,833 Banco Commercial
Portugues (3)................. $ 1,438,512 $ 1,728,019 0.1%
170,000 Banco Commercial Portugues
(New) (ADR)(a)(3)............. 2,108,031 2,592,500 0.2
175,000 Espirito Santo Financial Co.
(ADR)(a)(2)................... 4,931,908 6,168,750 0.5
-------------- -------------- ----------
8,478,451 10,489,269 0.8
- --------------------------------------------------------------------------------------------------------------------------
SPAIN 97,200 Empresa Nacional de
Electricidad S.A.
(ADR)(a)(7)................... 1,232,983 4,617,000 0.4
80,000 Repsol S.A. (ADR)(a)(17)....... 2,164,334 2,488,640 0.2
-------------- -------------- ----------
3,397,317 7,105,640 0.6
- --------------------------------------------------------------------------------------------------------------------------
521,315 British Petroleum PLC (17)..... 2,620,804 2,773,813 0.2
UNITED KINGDOM 200,000 British Petroleum PLC (ADR)
(a)(17)....................... 10,645,545 12,800,000 1.0
550,000 Huntingdon International
Holdings PLC (ADR)(a)(3)...... 12,358,643 5,018,750 0.4
75,000 Reuters Holdings PLC
(ADR)(a)(4)................... 3,814,272 5,925,000 0.5
-------------- -------------- ----------
29,439,264 26,517,563 2.1
- --------------------------------------------------------------------------------------------------------------------------
VENEZUELA 295,000 +Siderurgica Venezolana SIVENSA
S.A.I.C.A.-S.A.C.A. (ADR)
(Warrants)(a)(b)(2)++......... 695,375 41,300 0.0
- --------------------------------------------------------------------------------------------------------------------------
TOTAL FOREIGN STOCKS & WARRANTS 151,913,091 227,271,468 18.4
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
FACE
AMOUNT* FOREIGN BONDS
<S> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------
AUSTRALIA A$ 5,900,000 Queensland Treasury Global
Notes, 8.00% due
7/14/1999 (9)................. 4,383,000 4,286,956 0.3
- --------------------------------------------------------------------------------------------------------------------------
CANADA C$ 14,500,000 Government of Canada, 7.25% due
6/01/2003 (9)................. 10,739,024 11,473,694 0.9
- --------------------------------------------------------------------------------------------------------------------------
FRANCE Frf 44,000,000 French Government "OAT",
8.50%** due 4/25/2003(9)...... 8,852,519 8,949,712 0.7
- --------------------------------------------------------------------------------------------------------------------------
ITALY Lit 13,000,000,000 Buoni Poliennali del Tesoro
(BPTS), 12.00% due
1/01/1998 (9)................. 8,530,161 8,451,187 0.7
- --------------------------------------------------------------------------------------------------------------------------
MEXICO Mxp 53,174,920 Mexican Cetes 12.60%** due
9/07/1995 (9)................. 14,157,053 14,385,486 1.2
- --------------------------------------------------------------------------------------------------------------------------
NETHERLANDS 2,000,000 Aegon N.V., 7.00% due
9/15/2001 (11)................ 2,609,858 2,960,000 0.2
- --------------------------------------------------------------------------------------------------------------------------
SPAIN Esp 1,200,000,000 Government of Spain, 10.50% due
10/30/2003 (9)................ 10,317,638 9,714,086 0.8
- --------------------------------------------------------------------------------------------------------------------------
SWEDEN Skr 48,000,000 Government of Sweden, 10.75%
due 1/23/1997 (9)............. 6,691,234 6,456,091 0.5
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
52
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH SERIES FUND, INC.
Multiple Strategy Portfolio
Schedule of Investments as of December 31, 1993 (Continued)
================================================================================
<TABLE>
<CAPTION>
FACE VALUE PERCENT OF
COUNTRY AMOUNT* FOREIGN BONDS COST (NOTE 1A) NET ASSETS
<S> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------
UNITED KINGDOM L 3,250,000 UK Treasury Gilt, 8.75% due
9/01/1997 (9)................. $ 5,607,961 $ 5,309,371 0.4%
1,200,000 UK Treasury Gilt, 7.25% due
3/30/1998 (9)................. 1,792,448 1,885,282 0.2
-------------- -------------- ----------
7,400,409 7,194,653 0.6
- --------------------------------------------------------------------------------------------------------------------------
TOTAL FOREIGN BONDS 73,680,896 73,871,865 5.9
- --------------------------------------------------------------------------------------------------------------------------
INDUSTRY US CORPORATE BONDS
- --------------------------------------------------------------------------------------------------------------------------
COMPUTERS $ 5,000,000 Texas Instruments Inc., 9.00%
due 3/15/2001................. 5,143,400 5,793,750 0.5
- --------------------------------------------------------------------------------------------------------------------------
CONGLOMERATES 5,000,000 ITT Hartford Financial, 8.30%
due 12/01/2001................ 5,107,750 5,590,625 0.5
- --------------------------------------------------------------------------------------------------------------------------
ELECTRIC UTILITIES 10,000,000 Virginia Electric & Power Co.,
8.45% due 10/30/2003.......... 10,000,000 11,550,000 0.9
- --------------------------------------------------------------------------------------------------------------------------
TOBACCO Philip Morris Cos., Inc.:
5,000,000 9.25% due 12/01/1997........... 4,991,500 5,645,270 0.5
5,000,000 9.00% due 1/01/2001............ 5,246,300 5,640,625 0.4
10,000,000 8.75% due 6/01/2001............ 10,346,950 11,187,500 0.9
-------------- -------------- ----------
20,584,750 22,473,395 1.8
- --------------------------------------------------------------------------------------------------------------------------
TOTAL US CORPORATE BONDS 40,835,900 45,407,770 3.7
- --------------------------------------------------------------------------------------------------------------------------
US & FOREIGN GOVERNMENT
& AGENCY OBLIGATIONS
- --------------------------------------------------------------------------------------------------------------------------
FEDERAL HOME LOAN 20,000,000 Federal Home Loan Mortgage
MORTGAGE COMPANY Company, 7.00% due
9/15/2007..................... 19,218,750 20,098,438 1.6
20,000,000 Federal Home Loan Mortgage
Company, 6.75% due
4/25/2021..................... 20,312,500 19,962,500 1.6
-------------- -------------- ----------
39,531,250 40,060,938 3.2
- --------------------------------------------------------------------------------------------------------------------------
FOREIGN GOVERNMENT 5,000,000 Hydro Electric Quebec, 6.35%
OBLIGATIONS due 1/15/2002 (11)............ 5,000,000 4,921,875 0.4
5,000,000 Republic of Italy, 8.75% due
2/08/2001 (11)................ 5,373,050 5,681,260 0.5
-------------- -------------- ----------
10,373,050 10,603,135 0.9
- --------------------------------------------------------------------------------------------------------------------------
US GOVERNMENT US Treasury Notes:
OBLIGATIONS 40,000,000 7.875% due 8/15/2001........... 39,230,800 45,537,520 3.7
6,000,000 7.50% due 11/15/2001........... 6,023,438 6,694,686 0.5
25,000,000 6.25% due 2/15/2003............ 25,710,938 25,828,125 2.1
35,000,000 5.75% due 8/15/2003............ 36,416,406 34,885,165 2.8
US Treasury STRIPS:
25,000,000 9.064%** due 2/15/1994......... 24,724,952 24,911,950 2.0
15,000,000 3.38%** due 5/15/2000.......... 10,494,417 10,619,850 0.9
-------------- -------------- ----------
142,600,951 148,477,296 12.0
- --------------------------------------------------------------------------------------------------------------------------
TOTAL US & FOREIGN GOVERNMENT
& AGENCY OBLIGATIONS 192,505,251 199,141,369 16.1
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
53
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH SERIES FUND, INC.
Multiple Strategy Portfolio
Schedule of Investments as of December 31, 1993 (Concluded)
================================================================================
<TABLE>
<CAPTION>
FACE VALUE PERCENT OF
AMOUNT* SHORT-TERM SECURITIES COST (NOTE 1A) NET ASSETS
<S> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------
COMMERCIAL PAPER*** $ 20,000,000 BTR Dunlop Finance Inc., 3.35%
due 1/27/1994................. $ 19,951,611 $ 19,951,611 1.6%
20,000,000 Ciesco L.P. Co., 3.25% due
2/11/1994..................... 19,925,972 19,925,972 1.6
10,000,000 Corporate Asset Funding Co.,
Inc., 3.35% due 1/05/1994..... 9,996,278 9,996,278 0.8
11,943,000 Daimler Benz North America
Corp., 3.25% due 1/31/1994.... 11,910,654 11,910,654 1.0
42,011,000 General Electric Capital Corp.,
3.22% due 1/03/1994........... 42,003,485 42,003,485 3.4
10,000,000 Matterhorn Capital Corp., 3.22%
due 1/13/1994................. 9,989,267 9,989,267 0.8
5,000,000 Paribas Finance Inc., 3.36% due
1/05/1994..................... 4,998,133 4,998,133 0.4
- --------------------------------------------------------------------------------------------------------------------------
TOTAL SHORT TERM SECURITIES.... 118,775,400 118,775,400 9.6
- --------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS.............. $1,066,653,044 1,257,395,244 101.6
--------------
--------------
LIABILITIES IN EXCESS OF OTHER
ASSETS........................ (20,058,961) (1.6)
-------------- -----
NET ASSETS..................... $1,237,336,283 100.0
-------------- -----
-------------- -----
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Denominated in US dollars unless otherwise indicated.
** Represents the yield-to-maturity on this zero coupon issue.
*** Commercial paper is traded on a discount basis; the interest rates shown are
discount rates paid at the time of purchase by the Portfolio.
+ Non-income producing security.
++ Restricted securities as to resale. The value of the fund's investment in
restricted securities was approximately $26,522,000 representing 2.1% of net
assets.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
VALUE
ISSUE ACQUISITION DATE COST (NOTE 1A)
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------
Distribuidora Chilectra Metropolitana S.A. (ADR)....................... 2/12/92 $ 3,929,378 $ 5,600,584
Grupo Carso, S.A. de C.V. (ADR)........................................ 9/24/91 8,031,744 20,880,000
Siderurgica Venezolana SIVENSA S.A.I.C.A.-S.A.C.A. (ADR) (Warrants).... 2/13/92 695,375 41,300
- -------------------------------------------------------------------------------------------------------------------------
TOTAL.................................................................. $ 12,656,497 $ 26,521,884
------------ ------------
------------ ------------
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) American Depositary Receipt (ADR).
(b) Warrants entitle the Portfolio to purchase a predetermined number of shares
of Common Stock. The purchase price and number of shares are subject to
adjustment under certain conditions until the expiration date.
++ Receipts evidence payment by the Portfolio of 40% of the purchase price of
Class A Shares of International Semi-Tech Microelectronics, Inc. The
Portfolio is obligated to pay the remaining 60%, approximately $3,876,000,
over the next two years.
Corresponding industry groups for foreign stocks and bonds:
(1) Automotive & Equipment
(2) Banking
(3) Building and Construction
(4) Business Services
(5) Conglomerates
(6) Consumer--Durables
(7) Consumer--Electronics
(8) Food Merchandising
(9) Government Entities
(10) Insurance
(11) Machinery & Equipment
(12) Multi-Industry
(13) Oil--International
(14) Petroleum
(15) Real Estate
(16) Retail
(17) Services
(18) Transportation
(19) Utilities--Communication
(20) Utilities--Electric
(21) Utilities--Water
See Notes to Financial Statements.
54
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH SERIES FUND, INC.
Natural Resources Portfolio
Schedule of Investments as of December 31, 1993
================================================================================
<TABLE>
<CAPTION>
SHARES VALUE PERCENT OF
INDUSTRY HELD US STOCKS COST (NOTE 1A) NET ASSETS
<S> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------
ALUMINUM 27,000 Alcan Aluminum Ltd. ................... $ 565,515 $ 560,250 3.0%
9,700 Aluminum Co. of America................ 660,674 672,938 3.6
15,200 Reynolds Metals Co..................... 754,804 689,700 3.7
------------ ------------ ----------
1,980,993 1,922,888 10.3
- ----------------------------------------------------------------------------------------------------------------------------
CHEMICALS 14,700 du Pont (E.I.) de Nemours & Co......... 751,324 709,275 3.8
- ----------------------------------------------------------------------------------------------------------------------------
DIVERSIFIED NATURAL 24,100 Coastal Corp........................... 652,126 677,813 3.7
GAS PIPELINES
- ----------------------------------------------------------------------------------------------------------------------------
DIVERSIFIED RESOURCES 22,400 +Norsk Hydro A.S. (ADR)*................ 557,787 627,200 3.4
- ----------------------------------------------------------------------------------------------------------------------------
ENGINEERING & 29,800 Dresser Industries, Inc................ 615,288 618,350 3.4
CONSTRUCTION
- ----------------------------------------------------------------------------------------------------------------------------
NATURAL GAS 13,200 Consolidated Natural Gas Co............ 643,387 620,400 3.4
DISTRIBUTORS
- ----------------------------------------------------------------------------------------------------------------------------
OIL & GAS PRODUCERS 40,600 Norcen Energy Corp..................... 679,820 492,275 2.7
- ----------------------------------------------------------------------------------------------------------------------------
OIL SERVICES 99,600 +Parker Drilling Co..................... 694,705 547,800 3.0
76,200 +Rowan Companies Inc.................... 767,070 685,800 3.7
10,200 Schlumberger Ltd., Inc. ............... 633,288 603,075 3.3
29,000 Tidewater Inc. ........................ 587,938 580,000 3.1
------------ ------------ --------
2,683,001 2,416,675 13.1
- ----------------------------------------------------------------------------------------------------------------------------
PAPER & FOREST 7,900 Georgia-Pacific Corp................... 576,942 543,125 2.9
PRODUCTS 8,600 International Paper Co................. 577,877 582,650 3.2
14,000 Scott Paper Co......................... 553,792 575,750 3.1
16,100 Union Camp Corp........................ 716,627 766,762 4.2
16,800 Weyerhaeuser Co........................ 682,779 749,700 4.1
------------ ------------ --------
3,108,017 3,217,987 17.5
- ----------------------------------------------------------------------------------------------------------------------------
PETROLEUM- 11,800 Amoco Corp............................. 620,537 623,925 3.4
INTEGRATED 17,900 Imperial Oil Ltd....................... 674,229 606,362 3.3
20,500 Phillips Petroleum Co.................. 617,427 594,500 3.2
------------ ------------ --------
1,912,193 1,824,787 9.9
- ----------------------------------------------------------------------------------------------------------------------------
PETROLEUM- 10,000 Exxon Corp............................. 656,015 630,000 3.4
INTERNATIONAL 6,500 Royal Dutch Petroleum Co. N.V.
(ADR)*................................ 538,920 678,438 3.7
------------ ------------ --------
1,194,935 1,308,438 7.1
- ----------------------------------------------------------------------------------------------------------------------------
SPECIAL SITUATIONS 42,000 +Destec Energy Inc...................... 692,161 603,750 3.3
- ----------------------------------------------------------------------------------------------------------------------------
STEEL 25,000 Allegheny Ludlum Corp.................. 587,769 596,875 3.2
- ----------------------------------------------------------------------------------------------------------------------------
TOTAL US STOCKS 16,058,801 15,636,713 84.8
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
55
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH SERIES FUND, INC.
Natural Resources Portfolio
Schedule of Investments as of December 31, 1993 (Concluded)
================================================================================
<TABLE>
<CAPTION>
FACE VALUE PERCENT OF
AMOUNT SHORT-TERM SECURITIES COST (NOTE 1A) NET ASSETS
<S> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------
US GOVERNMENT AGENCY $ 1,000,000 Federal National Mortgage Association,
OBLIGATIONS** 3.135% due 1/10/1994.................. $ 999,129 $ 999,129 5.4%
- ----------------------------------------------------------------------------------------------------------------------------
COMMERCIAL PAPER** 943,000 General Electric Capital Corp., 3.22%
due 1/03/1994......................... 942,747 942,747 5.1
- ----------------------------------------------------------------------------------------------------------------------------
TOTAL SHORT-TERM SECURITIES 1,941,876 1,941,876 10.5
- ----------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS...................... $ 18,000,677 17,578,589 95.3
------------
------------
OTHER ASSETS LESS LIABILITIES.......... 858,236 4.7
------------ --------
NET ASSETS............................. $ 18,436,825 100.0%
------------ --------
------------ --------
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
+ Non-income producing security.
* American Depositary Receipt (ADR).
** Commercial Paper and US Government Agency Obligations are traded on a
discount basis; the interest rates shown are the discount rates paid at the
time of the purchase by the Portfolio.
See Notes to Financial Statements.
56
<PAGE>
(This page intentionally left blank)
57
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH SERIES FUND, INC.
Statements of Assets and Liabilities as of December 31, 1993
================================================================================
<TABLE>
<CAPTION>
CAPITAL GLOBAL
BALANCED STOCK STRATEGY
PORTFOLIO PORTFOLIO PORTFOLIO
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------
ASSETS:
Investments, at value* (Note 1a)........................................ $ 87,077,832 $ 225,323,693 $ 179,145,996
Cash.................................................................... 12,001 -- 17,791
Interest receivable..................................................... 664,018 56,226 802,432
Dividends receivable.................................................... 59,881 169,273 231,913
Receivable for securities sold.......................................... -- 2,424,283 --
Receivable for capital shares sold...................................... 406,383 1,365,778 3,259,967
Prepaid expenses and other assets (Note 1d)............................. 279 1,143 261
------------ ------------- -------------
Total assets.......................................................... 88,220,394 229,340,396 183,458,360
------------ ------------- -------------
LIABILITIES:
Payable for capital shares redeemed..................................... 147,633 873,992 708,047
Payable for securities purchased........................................ -- 1,426,346 --
Payable to investment adviser (Note 2).................................. 24,542 60,710 48,508
Payable for dividends to shareholders (Note 1f)......................... -- -- --
Accrued expenses and other liabilities.................................. 29,875 3,008,469 29,761
------------ ------------- -------------
Total liabilities..................................................... 202,050 5,369,517 786,316
------------ ------------- -------------
NET ASSETS.............................................................. $ 88,018,344 $ 223,970,879 $ 182,672,044
------------ ------------- -------------
------------ ------------- -------------
NET ASSETS CONSIST OF:
Common Stock, $0.10 par value+.......................................... $ 601,909 $ 870,455 $ 1,184,974
Paid-in capital in excess of par........................................ 75,139,054 158,514,034 161,760,373
Undistributed investment income -- net.................................. 1,451,652 1,232,859 2,060,075
Undistributed (accumulated) realized capital gains (losses) on
investments and foreign currency transactions -- net (Note 5)......... 1,293,454 22,586,210 2,945,309
Unrealized appreciation/depreciation on investments and foreign currency
transactions -- net................................................... 9,532,275 40,767,321 14,721,313
------------ ------------- -------------
NET ASSETS.............................................................. $ 88,018,344 $ 223,970,879 $ 182,672,044
------------ ------------- -------------
------------ ------------- -------------
Capital shares outstanding.............................................. 6,019,091 8,704,555 11,849,745
------------ ------------- -------------
------------ ------------- -------------
Net asset value, offering and redemption price per share................ $ 14.62 $ 25.73 $ 15.42
------------ ------------- -------------
------------ ------------- -------------
*Identified cost........................................................ $ 77,545,557 $ 184,555,904 $ 164,411,080
------------ ------------- -------------
------------ ------------- -------------
+Authorized shares...................................................... 100,000,000 100,000,000 100,000,000
------------ ------------- -------------
------------ ------------- -------------
</TABLE>
See Notes to Financial Statements.
58
<PAGE>
- --------------------------------------------------------------------------------
================================================================================
<TABLE>
<CAPTION>
INTERMEDIATE LONG TERM
GROWTH HIGH GOVERNMENT CORPORATE MONEY MULTIPLE NATURAL
STOCK YIELD BOND BOND RESERVE STRATEGY RESOURCES
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
<S> <C> <C> <C> <C> <C> <C>
-------------------------------------------------------------------------------------------------------------------------
$ 124,015,701 $ 95,409,160 $ 279,730,630 $ 137,465,480 $ 545,592,679 $1,257,395,244 $ 17,578,589
338 13,458 437,957 424 12,138 -- 3,887
9,630 2,177,459 4,817,050 2,760,030 1,473,079 5,896,535 --
110,808 -- -- -- -- 691,953 10,620
1,887,574 -- -- -- -- 3,658,234 --
362,640 893,328 411,936 34,946 -- 1,276,783 1,228,752
672 392 10,912 5,149 4,926 7,079 62
------------- ------------ ------------- ------------- ------------- -------------- -------------
126,387,363 98,493,797 285,408,485 140,266,029 547,082,822 1,268,925,828 18,821,910
------------- ------------ ------------- ------------- ------------- -------------- -------------
1,693,631 1,248,683 796,762 887,186 -- 3,461,510 375,464
860,500 2,446,845 -- -- -- 24,497,761 --
34,184 26,313 80,176 39,606 155,293 339,028 2,237
-- -- -- -- -- -- --
962,760 32,572 36,521 18,475 217,387 3,291,246 7,384
------------- ------------ ------------- ------------- ------------- -------------- -------------
3,551,075 3,754,413 913,459 945,267 372,680 31,589,545 385,085
------------- ------------ ------------- ------------- ------------- -------------- -------------
$ 122,836,288 $ 94,739,384 $ 284,495,026 $ 139,320,762 $ 546,710,142 $1,237,336,283 $ 18,436,825
------------- ------------ ------------- ------------- ------------- -------------- -------------
------------- ------------ ------------- ------------- ------------- -------------- -------------
$ 498,288 $ 978,978 $ 2,367,533 $ 1,106,561 $ 54,669,860 $ 6,236,165 $ 244,803
95,500,964 95,128,336 261,884,780 126,019,324 492,028,742 886,165,592 30,560,818
853,551 706,785 1,575,239 831,371 -- 16,248,477 171,216
18,174,820 (3,942,622) 8,992,968 4,749,462 -- 138,031,201 (12,117,924)
7,808,665 1,867,907 9,674,506 6,614,044 11,540 190,654,848 (422,088)
------------- ------------ ------------- ------------- ------------- -------------- -------------
$ 122,836,288 $ 94,739,384 $ 284,495,026 $ 139,320,762 $ 546,710,142 $1,237,336,283 $ 18,436,825
------------- ------------ ------------- ------------- ------------- -------------- -------------
------------- ------------ ------------- ------------- ------------- -------------- -------------
4,982,884 9,789,784 23,675,326 11,065,606 546,698,602 62,361,655 2,448,035
------------- ------------ ------------- ------------- ------------- -------------- -------------
------------- ------------ ------------- ------------- ------------- -------------- -------------
$ 24.65 $ 9.68 $ 12.02 $ 12.59 $ 1.00 $ 19.84 $ 7.53
------------- ------------ ------------- ------------- ------------- -------------- -------------
------------- ------------ ------------- ------------- ------------- -------------- -------------
$ 116,207,036 $ 93,541,253 $ 270,056,124 $ 130,851,436 $ 545,581,139 $1,066,653,044 $ 18,000,677
------------- ------------ ------------- ------------- ------------- -------------- -------------
------------- ------------ ------------- ------------- ------------- -------------- -------------
100,000,000 100,000,000 100,000,000 100,000,000 2,000,000,000 300,000,000 100,000,000
------------- ------------ ------------- ------------- ------------- -------------- -------------
------------- ------------ ------------- ------------- ------------- -------------- -------------
</TABLE>
59
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH SERIES FUND, INC.
Statements of Operations for the Year Ended December 31, 1993
================================================================================
<TABLE>
<CAPTION>
CAPITAL GLOBAL
BALANCED STOCK STRATEGY
PORTFOLIO PORTFOLIO PORTFOLIO
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME (NOTES 1B & 1C):
Interest and amortization of premium and discount earned*.............. $ 2,214,744 $ 456,734 $ 1,998,347
Dividends*............................................................. 844,191 3,324,851 1,632,431
Other income........................................................... -- -- --
----------- ------------ ------------
Total income......................................................... 3,058,935 3,781,585 3,630,778
----------- ------------ ------------
EXPENSES:
Investment advisory fees (Note 2)...................................... 242,309 693,049 324,700
Transfer agent fees (Note 2)........................................... 5,000 5,000 5,000
Printing and shareholder reports....................................... -- -- --
Custodian fees......................................................... 20,447 39,180 65,367
Professional fees...................................................... 5,555 9,505 5,626
Registration fees (Note 1d)............................................ 5,154 -- 1,014
Directors' fees and expenses........................................... 490 1,926 634
Accounting services (Note 2)........................................... 38,771 36,829 37,459
Pricing services....................................................... 1,490 1,290 8,155
Other.................................................................. 535 1,384 1,929
----------- ------------ ------------
Total expenses before reimbursement.................................... 319,751 788,163 449,884
Reimbursement of expenses (Note 2)..................................... -- -- (13,194)
----------- ------------ ------------
Expenses after reimbursement........................................... 319,751 788,163 436,690
----------- ------------ ------------
Investment income -- net............................................... 2,739,184 2,993,422 3,194,088
----------- ------------ ------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY
TRANSACTIONS -- NET (NOTES 1C, 1E & 3):
Realized gain (loss) on investments -- net............................. 1,294,829 22,655,800 2,702,083
Realized gain (loss) on foreign currency transactions -- net........... -- (69,431) 242,923
Change in unrealized appreciation/depreciation on investments -- net... 5,063,435 7,733,392 12,963,335
Change in unrealized appreciation/depreciation on foreign currency
transactions -- net.................................................. -- (493) (6,183)
----------- ------------ ------------
Total realized and unrealized gain on investments and foreign currency
transactions -- net.................................................. 6,358,264 30,319,268 15,902,158
----------- ------------ ------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS................... $ 9,097,448 $ 33,312,690 $ 19,096,246
----------- ------------ ------------
----------- ------------ ------------
*Net of withholding tax on dividends/interest.......................... $ -- $ 84,958 $ 148,323
----------- ------------ ------------
----------- ------------ ------------
</TABLE>
See Notes to Financial Statements.
60
<PAGE>
- --------------------------------------------------------------------------------
================================================================================
<TABLE>
<CAPTION>
INTERMEDIATE LONG TERM
GROWTH HIGH GOVERNMENT CORPORATE MONEY MULTIPLE NATURAL
STOCK YIELD BOND BOND RESERVE STRATEGY RESOURCES
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
<S> <C> <C> <C> <C> <C> <C>
---------------------------------------------------------------------------------------------------------------
$ 550,823 $ 8,613,345 $18,963,058 $ 9,680,786 $ 19,833,824 $ 24,764,544 $ 35,905
1,543,370 76,268 -- -- -- 13,608,423 326,176
149,230 13,165 279,330 77,758 -- 4,835 --
------------ ------------ ------------ ------------ ------------ ------------- --------
2,243,423 8,702,778 19,242,388 9,758,544 19,833,824 38,377,802 362,081
------------ ------------ ------------ ------------ ------------ ------------- --------
430,352 272,599 943,199 461,498 1,955,347 3,881,854 47,974
5,000 5,000 5,000 5,000 5,000 5,000 5,000
-- -- -- -- 246 -- --
25,751 21,176 26,754 16,477 60,360 250,242 9,019
7,518 6,533 8,592 8,210 29,616 32,487 2,976
1,447 4,089 38 18 86 157 1
1,146 568 2,365 1,093 5,717 10,017 39
20,792 40,638 31,452 22,740 34,222 54,061 20,053
-- 2,371 6,140 10,932 -- 4,889 --
2,265 1,635 2,585 1,055 5,559 11,814 74
------------ ------------ ----------- ------------ ------------ ------------- --------
494,271 354,609 1,026,125 527,023 2,096,153 4,250,521 85,136
-- -- -- -- -- -- (12,709)
------------ ------------ ----------- ------------ ------------ ------------- --------
494,271 354,609 1,026,125 527,023 2,096,153 4,250,521 72,427
------------ ------------ ----------- ------------ ------------ ------------- --------
1,749,152 8,348,169 18,216,263 9,231,521 17,737,671 34,127,281 289,654
------------ ------------ ----------- ------------ ------------ ------------- --------
18,276,850 2,381,169 9,062,256 4,818,952 165,799 135,002,249 536,256
-- -- -- -- -- 3,516,731 (11)
(9,921,076) 2,702,167 2,597,175 2,696,998 (60,196) 9,725,458 (132,511)
-- -- -- -- -- (65,630) (11)
------------ ------------ ----------- ------------ ------------ ------------- --------
8,355,774 5,083,336 11,659,431 7,515,950 105,603 148,178,808 403,723
------------ ------------ ----------- ------------ ------------ ------------- --------
$ 10,104,926 $ 13,431,505 $29,875,694 $ 16,747,471 $ 17,843,274 $ 182,306,089 $693,377
------------ ------------ ----------- ------------ ------------ ------------- --------
------------ ------------ ----------- ------------ ------------ ------------- --------
$ 3,795 $ -- $ -- $ -- $ -- $ 476,012 $ 9,270
------------ ------------ ----------- ------------ ------------ ------------- --------
------------ ------------ ----------- ------------ ------------ ------------- --------
</TABLE>
61
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH SERIES FUND, INC.
Statements of Changes in Net Assets
================================================================================
<TABLE>
<CAPTION>
BALANCED PORTFOLIO CAPITAL STOCK PORTFOLIO
-------------------------------- --------------------------------
FOR THE YEAR ENDED DECEMBER 31, FOR THE YEAR ENDED DECEMBER 31,
-------------------------------- --------------------------------
INCREASE (DECREASE) IN NET ASSETS: 1993 1992 1993 1992
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------
OPERATIONS:
Investment income -- net..................... $ 2,739,184 $ 2,017,103 $ 2,993,422 $ 3,442,597
Realized gain (loss) on investments and
foreign currency transactions -- net....... 1,294,829 762,076 22,586,369 8,742,905
Change in unrealized
appreciation/depreciation on
investments -- net......................... 5,063,435 510,940 7,733,392 (7,300,893)
Change in unrealized
appreciation/depreciation on foreign
currency transactions -- net............... -- -- (493) 25
------------ ------------ ----------- ------------
Net increase in net assets resulting from
operations................................. 9,097,448 3,290,119 33,312,690 4,884,634
------------ ------------ ----------- ------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
(NOTE 1F):
Investment income -- net..................... (3,304,634) (794,365) (5,214,104) (1,590,297)
Realized gain on investments -- net.......... (756,576) (562,899) (5,596,154) (4,063,682)
------------ ----------- ----------- ------------
Net decrease in net assets resulting from
dividends and distributions to
shareholders............................... (4,061,210) (1,357,264) (10,810,258) (5,653,979)
------------ ----------- ------------- ------------
CAPITAL SHARE TRANSACTIONS (NOTE 4):
Net increase (decrease) in net assets derived
from capital share transactions............ 26,902,003 16,019,456 (948,421) 25,581,934
------------ ------------ ------------ ------------
NET ASSETS:
Total increase (decrease) in net assets...... 31,938,241 17,952,311 21,554,011 24,812,589
Beginning of year............................ 56,080,103 38,127,792 202,416,868 177,604,279
------------ ------------ ------------ ------------
End of year*................................. $ 88,018,344 $ 56,080,103 $223,970,879 $202,416,868
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
*Undistributed investment income -- net...... $ 1,451,652 $ 2,017,102 $ 1,232,859 $ 3,453,541
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
</TABLE>
See Notes to Financial Statements.
62
<PAGE>
- --------------------------------------------------------------------------------
================================================================================
<TABLE>
<CAPTION>
GLOBAL STRATEGY PORTFOLIO GROWTH STOCK PORTFOLIO HIGH YIELD PORTFOLIO
------------------------------ ------------------------------- -----------------------------
FOR THE YEAR ENDED FOR THE YEAR ENDED FOR THE YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31,
------------------------------ ------------------------------- -----------------------------
1993 1992 1993 1992 1993 1992
<S> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------
$ 3,194,088 $ 1,637,375 $ 1,749,152 $ 1,498,360 $ 8,348,169 $ 7,216,061
2,945,006 702,578 18,276,850 12,913,278 2,381,169 1,234,233
12,963,335 (1,162,690) (9,921,076) (10,647,807) 2,702,167 2,988,817
(6,183) (8,433) -- -- -- --
------------ ----------- ------------ ------------ ----------- -----------
19,096,246 1,168,830 10,104,926 3,763,831 13,431,505 11,439,111
------------ ----------- ------------ ------------ ----------- -----------
(2,745,665) (450,514) (2,393,959) (600,992) (8,491,599) (6,884,110)
(722,008) (362,601) (5,017,036) -- -- --
------------ ----------- ------------ ------------ ----------- -----------
(3,467,673) (813,115) (7,410,995) (600,992) (8,491,599) (6,884,110)
------------ ----------- ------------ ------------ ----------- -----------
114,444,001 22,350,551 (18,919,845) 22,184,788 21,765,864 12,406,500
------------ ----------- ------------ ------------ ----------- -----------
130,072,574 22,706,266 (16,225,914) 25,347,627 26,705,770 16,961,501
52,599,470 29,893,204 139,062,202 113,714,575 68,033,614 51,072,113
------------ ----------- ------------ ------------ ----------- -----------
$182,672,044 $52,599,470 $122,836,288 $139,062,202 $94,739,384 $68,033,614
------------ ----------- ------------ ------------ ----------- -----------
------------ ----------- ------------ ------------ ----------- -----------
$ 2,060,075 $ 1,611,652 $ 853,551 $ 1,498,358 $ 706,785 $ 850,215
------------ ----------- ------------ ------------ ----------- -----------
------------ ----------- ------------ ------------ ----------- -----------
</TABLE>
63
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH SERIES FUND, INC.
Statements of Changes in Net Assets (Concluded)
================================================================================
<TABLE>
<CAPTION>
INTERMEDIATE GOVERNMENT BOND LONG TERM CORPORATE BOND
PORTFOLIO PORTFOLIO
-------------------------------- -------------------------------
FOR THE YEAR ENDED DECEMBER 31, FOR THE YEAR ENDED DECEMBER 31,
-------------------------------- -------------------------------
INCREASE (DECREASE) IN NET ASSETS: 1993 1992 1993 1992
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------
OPERATIONS:
Investment income -- net..................... $ 18,216,263 $ 18,625,540 $ 9,231,521 $ 9,562,012
Realized gain (loss) on investments and
foreign currency transactions -- net....... 9,062,256 6,999,297 4,818,952 3,446,389
Change in unrealized
appreciation/depreciation on investments
and call
options written -- net..................... 2,597,175 (7,712,657) 2,696,998 (3,341,515)
Change in unrealized
appreciation/depreciation on foreign
currency transactions -- net............... -- -- -- --
------------ ------------ ------------ ------------
Net increase in net assets resulting from
operations................................. 29,875,694 17,912,180 16,747,471 9,666,886
------------ ------------ ------------ ------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
(NOTE 1F):
Investment income -- net..................... (18,258,239) (18,699,652) (9,257,762) (9,648,937)
Realized gain on investments -- net.......... (5,079,232) -- (1,644,495) --
------------ ------------ ------------ ------------
Net decrease in net assets resulting from
dividends and distributions to
shareholders............................... (23,337,471) (18,699,652) (10,902,257) (9,648,937)
------------ ------------ ------------ -------------
CAPITAL SHARE TRANSACTIONS (NOTE 4):
Net increase (decrease) in net assets derived
from capital share transactions............ 8,702,535 8,607,584 6,611,403 (1,549,642)
------------ ------------ ------------ ------------
NET ASSETS:
Total increase (decrease) in net assets...... 15,240,758 7,820,112 12,456,617 (1,531,693)
Beginning of year............................ 269,254,268 261,434,156 126,864,145 128,395,838
------------ ------------ ------------ ------------
End of year*................................. $284,495,026 $269,254,268 $139,320,762 $126,864,145
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
*Undistributed investment income -- net...... $ 1,575,239 $ 1,547,969 $ 831,371 $ 785,876
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
</TABLE>
+Includes unrealized appreciation/depreciation.
See Notes to Financial Statements.
64
<PAGE>
- --------------------------------------------------------------------------------
================================================================================
<TABLE>
<CAPTION>
MONEY RESERVE PORTFOLIO MULTIPLE STRATEGY PORTFOLIO NATURAL RESOURCES PORTFOLIO
--------------------------------- --------------------------------- -----------------------------
FOR THE YEAR ENDED FOR THE YEAR ENDED FOR THE YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31,
--------------------------------- --------------------------------- -----------------------------
1993 1992 1993 1992 1993 1992
<S> <C> <C> <C> <C> <C>
---------------------------------------------------------------------------------------------------------
$ 17,737,671 $ 26,097,812 $ 34,127,281 $ 36,974,001 $ 289,654 $ 244,264
165,799 1,228,966 138,518,980 55,323,117 536,245 (297,262)
(60,196) (353,487) 9,725,458 (45,201,181) (132,511) 185,506
-- -- (65,630) (103,452) (11) 11
-------------- -------------- -------------- -------------- ----------- -----------
17,843,274 26,973,291 182,306,089 46,992,485 693,377 132,519
------------- -------------- -------------- -------------- ----------- -----------
(17,737,671) (26,097,812) (54,486,771) (19,892,553) (362,042) (134,606)
(165,799) (803,743)+ (49,964,250) (5,030,454) -- --
------------- -------------- -------------- -------------- ----------- -----------
(17,903,470) (26,901,555) (104,451,021) (24,923,007) (362,042) (134,606)
------------- -------------- -------------- -------------- ----------- -----------
(100,419,340) (150,902,549) 22,458,998 (37,442,033) 10,118,313 (40,350)
------------- -------------- -------------- -------------- ----------- -----------
(100,479,536) (150,830,813) 100,314,066 (15,372,555) 10,449,648 (42,437)
647,189,678 798,020,491 1,137,022,217 1,152,394,772 7,987,177 8,029,614
------------- -------------- -------------- -------------- ----------- -----------
$ 546,710,142 $ 647,189,678 $1,237,336,283 $1,137,022,217 $18,436,825 $ 7,987,177
------------- -------------- -------------- -------------- ----------- -----------
------------- -------------- -------------- -------------- ----------- -----------
$ -- $ -- $ 16,248,477 $ 36,605,194 $ 171,216 $ 243,604
------------- -------------- -------------- -------------- ----------- -----------
------------- -------------- -------------- -------------- ----------- -----------
</TABLE>
65
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH SERIES FUND, INC.
Financial Highlights
================================================================================
<TABLE>
<CAPTION>
BALANCED PORTFOLIO
----------------------------------------------------------------
FOR THE YEAR ENDED DECEMBER 31,
----------------------------------------------------------------
1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------
THE FOLLOWING PER SHARE DATA AND RATIOS HAVE BEEN
DERIVED FROM INFORMATION PROVIDED IN THE FINANCIAL
STATEMENTS.
PER SHARE
OPERATING PERFORMANCE:
Net asset value, beginning of year...................... $ 13.70 $ 13.29 $ 11.78 $ 12.25 $ 10.59
-------- -------- -------- -------- --------
Investment income -- net................................ .50 .47 .60 .64 .48
Realized and unrealized gain (loss) on investments and
foreign currency transactions -- net (1).............. 1.35 .38 1.77 (.47) 1.66
-------- -------- -------- -------- --------
Total from investment operations........................ 1.85 .85 2.37 .17 2.14
-------- -------- -------- -------- --------
Less dividends and distributions:
Investment income -- net................................ (.75) (.26) (.68) (.56) (.48)
Realized gain on investments -- net..................... (.18) (.18) (.18) (.08) --
-------- -------- -------- -------- --------
Total dividends and distributions....................... (.93) (.44) (.86) (.64) (.48)
-------- -------- -------- -------- --------
Net asset value, end of year............................ $ 14.62 $ 13.70 $ 13.29 $ 11.78 $ 12.25
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
TOTAL INVESTMENT RETURN:*
Based on net asset value per share...................... 14.31% 6.67% 20.95% 1.57% 20.75%
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
RATIOS TO AVERAGE NET ASSETS:
Expenses, net of reimbursement.......................... .43% .48% .50% .50% .50%
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Expenses................................................ .43% .48% .50% .50% .66%
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Investment income -- net................................ 3.72% 4.40% 4.91% 5.56% 5.58%
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
SUPPLEMENTAL DATA:
Net assets, end of year (in thousands).................. $ 88,018 $ 56,080 $ 38,128 $ 29,065 $ 27,936
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Portfolio turnover...................................... 25.38% 33.15% 58.77% 26.84% 48.43%
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
</TABLE>
- ------------
* Total investment returns exclude the effects of sales loads.
(1) Foreign currency transaction amounts have been reclassified to conform to
the 1993 presentation.
See Notes to Financial Statements.
66
<PAGE>
- --------------------------------------------------------------------------------
================================================================================
<TABLE>
<CAPTION>
CAPITAL STOCK PORTFOLIO GLOBAL STRATEGY PORTFOLIO
----------------------------------------------------------------- ------------------------------------------------
FOR THE YEAR ENDED DECEMBER 31, FOR THE YEAR ENDED DECEMBER 31,
----------------------------------------------------------------- ------------------------------------------------
1993 1992 1991 1990 1989 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C> <C> <C> <C>
----------------------------------------------------------------------------------------------------------------------
$ 23.22 $ 23.39 $ 19.65 $ 20.19 $ 16.07 $ 13.23 $ 13.16 $ 12.00 $ 11.68
--------- --------- --------- --------- --------- --------- -------- -------- --------
.33 .39 .45 .54 .61 .36 .39 .41 .82
3.41 .16 4.97 (.44) 4.16 2.61 (.01) 1.60 (.14)
--------- --------- --------- --------- --------- --------- -------- -------- --------
3.74 .55 5.42 .10 4.77 2.97 .38 2.01 .68
--------- --------- --------- --------- --------- --------- -------- -------- --------
(.59) (.20) (.54) (.52) (.65) (.60) (.17) (.85) (.36)
(.64) (.52) (1.14) (.12) -- (.18) (.14) -- --
--------- --------- --------- --------- --------- --------- -------- -------- --------
(1.23) (.72) (1.68) (.64) (.65) (.78) (.31) (.85) (.36)
--------- --------- --------- --------- --------- --------- -------- -------- --------
$ 25.73 $ 23.22 $ 23.39 $ 19.65 $ 20.19 $ 15.42 $ 13.23 $ 13.16 $ 12.00
--------- --------- --------- --------- --------- --------- -------- -------- --------
--------- --------- --------- --------- --------- --------- -------- -------- --------
17.01% 2.47% 29.05% 0.61% 30.20% 23.73% 3.00% 17.50% 6.01%
--------- --------- --------- --------- --------- --------- -------- -------- --------
--------- --------- --------- --------- --------- --------- -------- -------- --------
.38% .41% .40% .40% .41% .45% .50% .50% .50%
--------- --------- --------- --------- --------- --------- -------- -------- --------
--------- --------- --------- --------- --------- --------- -------- -------- --------
.38% .41% .40% .40% .41% .46% .54% .60% .61%
--------- --------- --------- --------- --------- --------- -------- -------- --------
--------- --------- --------- --------- --------- --------- -------- -------- --------
1.43% 1.89% 2.27% 2.66% 3.45% 3.27% 3.84% 3.86% 8.03%
--------- --------- --------- --------- --------- --------- -------- -------- --------
--------- --------- --------- --------- --------- --------- -------- -------- --------
$ 223,971 $ 202,417 $ 177,604 $ 128,511 $ 137,705 $ 182,672 $ 52,599 $ 29,893 $ 22,087
--------- --------- --------- --------- --------- --------- -------- -------- --------
--------- --------- --------- --------- --------- --------- -------- -------- --------
100.12% 74.89% 63.90% 61.76% 55.41% 30.53% 43.56% 93.85% 104.19%
--------- --------- --------- --------- --------- --------- -------- -------- --------
--------- --------- --------- --------- --------- --------- -------- -------- --------
</TABLE>
<TABLE>
<CAPTION>
1989
--------
<S> <C>
$ 10.41
--------
.38
1.41
--------
1.79
--------
(.52)
--
--------
(.52)
--------
$ 11.68
--------
--------
17.76%
--------
--------
.50%
--------
--------
.75%
--------
--------
4.07%
--------
--------
$ 13,215
--------
--------
80.25%
--------
--------
</TABLE>
67
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH SERIES FUND, INC.
Financial Highlights (Continued)
================================================================================
<TABLE>
<CAPTION>
GROWTH STOCK PORTFOLIO
----------------------------------------------------------------
FOR THE YEAR ENDED DECEMBER 31,
----------------------------------------------------------------
1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------
THE FOLLOWING PER SHARE DATA AND RATIOS HAVE BEEN
DERIVED FROM INFORMATION PROVIDED IN THE FINANCIAL
STATEMENTS.
PER SHARE
OPERATING PERFORMANCE:
Net asset value, beginning of year.................. $ 23.98 $ 23.31 $ 16.28 $ 18.95 $ 15.57
-------- -------- -------- -------- --------
Investment income -- net............................ .32 .26 .25 .29 .30
Realized and unrealized gain (loss) on investments
and foreign currency transactions -- net (1)...... 1.63 .53 7.06 (2.63) 3.30
-------- -------- -------- -------- --------
Total from investment operations.................... 1.95 .79 7.31 (2.34) 3.60
-------- -------- -------- -------- --------
Less dividends and distributions:
Investment income -- net............................ (.41) (.12) (.28) (.33) (.22)
Realized gain on investments -- net................. (.87) -- -- -- --
-------- -------- -------- -------- --------
Total dividends and distributions................... (1.28) (.12) (.28) (.33) (.22)
-------- -------- -------- -------- --------
Net asset value, end of year........................ $ 24.65 $ 23.98 $ 23.31 $ 16.28 $ 18.95
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
TOTAL INVESTMENT RETURN:*
Based on net asset value per share.................. 8.63% 3.40% 45.31% (12.41%) 23.20%
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
RATIOS TO AVERAGE NET ASSETS:
Expenses, net of reimbursement...................... .38% .42% .42% .43% .42%
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Expenses............................................ .38% .42% .42% .43% .42%
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Investment income -- net............................ 1.35% 1.32% 1.56% 1.43% 1.69%
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
SUPPLEMENTAL DATA:
Net assets, end of year (in thousands).............. $122,836 $139,062 $113,715 $ 52,086 $ 79,109
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Portfolio turnover.................................. 160.29% 87.25% 60.48% 94.54% 78.87%
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
</TABLE>
- ------------
* Total investment returns exclude the effects of sales loads.
(1) Foreign currency transaction amounts have been reclassified to conform to
the 1993 presentation.
See Notes to Financial Statements.
68
<PAGE>
- --------------------------------------------------------------------------------
================================================================================
<TABLE>
<CAPTION>
HIGH YIELD PORTFOLIO
----------------------------------------------------------------
FOR THE YEAR ENDED DECEMBER 31,
----------------------------------------------------------------
1993 1992 1991 1990 1989
<S> <C> <C> <C> <C>
----------------------------------------------------------------
$ 9.10 $ 8.44 $ 6.98 $ 8.92 $ 9.66
-------- -------- -------- -------- --------
.94 1.03 1.02 1.24 1.20
.62 .64 1.47 (1.94) (.73)
-------- -------- -------- -------- --------
1.56 1.67 2.49 (.70) .47
-------- -------- -------- -------- --------
(.98) (1.01) (1.03) (1.24) (1.21)
-- -- -- -- --
-------- -------- -------- -------- --------
(.98) (1.01) (1.03) (1.24) (1.21)
-------- -------- -------- -------- --------
$ 9.68 $ 9.10 $ 8.44 $ 6.98 $ 8.92
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
18.11% 20.63% 37.77% (8.83%) 5.08%
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
.43% .44% .46% .45% .44%
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
.43% .44% .46% .45% .44%
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
10.17% 11.45% 12.74% 14.93% 12.64%
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
$ 94,739 $ 68,034 $ 51,072 $ 34,673 $ 58,910
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
73.01% 83.95% 76.34% 31.01% 70.43%
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
</TABLE>
69
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH SERIES FUND, INC.
Financial Highlights (Continued)
================================================================================
<TABLE>
<CAPTION>
INTERMEDIATE GOVERNMENT PORTFOLIO
- ----------------------------------------------------------------------------------------------------------------------------
FOR THE YEAR ENDED DECEMBER 31,
- ----------------------------------------------------------------------------------------------------------------------------
1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------
THE FOLLOWING PER SHARE DATA AND RATIOS HAVE BEEN
DERIVED FROM INFORMATION PROVIDED IN THE FINANCIAL
STATEMENTS.
PER SHARE
OPERATING PERFORMANCE:
Net asset value, beginning of year................ $ 11.75 $ 11.79 $ 11.04 $ 11.02 $ 10.58
--------- --------- --------- --------- ----------
Investment income -- net.......................... .83 .83 .86 .92 .92
Realized and unrealized gain (loss) on investments
and foreign currency transactions -- net (1).... .50 (.04) .76 .01 .44
Total from investment operations.................. 1.33 .79 1.62 .93 1.36
--------- --------- --------- --------- ----------
LESS DIVIDENDS AND DISTRIBUTIONS:
Investment income -- net.......................... (.84) (.83) (.87) (.91) (.92)
Realized gain on investments -- net............... (.22) -- -- -- --
--------- --------- --------- --------- ----------
Total dividends and distributions................. (1.06) (.83) (.87) (.91) (.92)
--------- --------- --------- --------- ----------
Net asset value, end of year...................... $ 12.02 $ 11.75 $ 11.79 $ 11.04 $ 11.02
--------- --------- --------- --------- ----------
--------- --------- --------- --------- ----------
TOTAL INVESTMENT RETURN:*
Based on net asset value per share................ 11.20% 7.03% 15.57% 8.98% 13.46%
--------- --------- --------- --------- ----------
--------- --------- --------- --------- ----------
RATIOS TO AVERAGE NET ASSETS:
Expenses.......................................... .36% .40% .39% .40% .41%
--------- --------- --------- --------- ----------
--------- --------- --------- --------- ----------
Investment income -- net.......................... 6.42% 7.03% 7.82% 8.50% 8.53%
--------- --------- --------- --------- ----------
--------- --------- --------- --------- ----------
Investment income -- net and realized gain (loss) on
investments -- net.............................. -- -- -- -- --
--------- --------- --------- --------- ----------
--------- --------- --------- --------- ----------
SUPPLEMENTAL DATA:
Net assets, end of year (in thousands)............ $ 284,495 $ 269,254 $ 261,434 $ 231,672 $ 224,531
--------- --------- --------- --------- ----------
--------- --------- --------- --------- ----------
Portfolio turnover................................ 113.61% 80.54% 138.41% 129.98% 227.15%
--------- --------- --------- --------- ----------
--------- --------- --------- --------- ----------
</TABLE>
- ------------
* Total investment returns exclude the effects of sales loads.
(1) Foreign currency transaction amounts have been reclassified to conform to
the 1993 presentation.
See Notes to Financial Statements.
70
<PAGE>
- --------------------------------------------------------------------------------
================================================================================
<TABLE>
<CAPTION>
LONG TERM CORPORATE BOND PORTFOLIO MONEY RESERVE PORTFOLIO
----------------------------------------------------------------- ---------------------------------------------------
FOR THE YEAR ENDED DECEMBER 31, FOR THE YEAR ENDED DECEMBER 31,
----------------------------------------------------------------- ---------------------------------------------------
1993 1992 1991 1990 1989 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
-------------------------------------------------------------------------------------------------------------------------
$ 12.07 $ 12.06 $ 11.21 $ 11.36 $ 10.91 $ 1.00 $ 1.00 $ 1.00 $ 1.00
--------- --------- --------- --------- --------- --------- --------- --------- ---------
.83 .90 .96 .98 1.00 .03 .04 .06 .08
.68 .02 .85 (.15) .45 -- -- -- --
--------- --------- --------- --------- --------- --------- --------- --------- ---------
1.51 .92 1.81 .83 1.45 .03 .04 .06 .08
--------- --------- --------- --------- --------- --------- --------- --------- ---------
(.83) (.91) (.96) (.98) (1.00) (.03) (.04) (.06) (.08)
(.16) -- -- -- -- -- -- -- --
--------- --------- --------- --------- --------- --------- --------- --------- ---------
(.99) (.91) (.96) (.98) (1.00) (.03) (.04) (.06) (.08)
--------- --------- --------- --------- --------- --------- --------- --------- ---------
$ 12.59 $ 12.07 $ 12.06 $ 11.21 $ 11.36 $ 1.00 $ 1.00 $ 1.00 $ 1.00
--------- --------- --------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- --------- --------- ---------
13.01% 8.05% 17.01% 7.83% 13.96% 3.08% 3.77% 6.11% 8.26%
--------- --------- --------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- --------- --------- ---------
.38% .43% .42% .43% .44% .36% .39% .38% .39%
--------- --------- --------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- --------- --------- ---------
6.65% 7.51% 8.35% 8.81% 9.01% -- -- -- --
--------- --------- --------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- --------- --------- ---------
-- -- -- -- -- 3.03% 3.77% 5.97% 7.92%
--------- --------- --------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- --------- --------- ---------
$ 139,321 $ 126,864 $ 128,396 $ 119,237 $ 126,655 $ 546,710 $ 647,190 $ 798,020 $ 935,463
--------- --------- --------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- --------- --------- ---------
110.53% 93.10% 124.58% 107.36% 138.89% -- -- -- --
--------- --------- --------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- --------- --------- ---------
<CAPTION>
1989
---------
<S> <C>
$ 1.00
---------
.09
--
---------
.09
---------
(.09)
--
---------
(.09)
---------
$ 1.00
---------
---------
9.30%
---------
---------
.38%
---------
---------
--
---------
---------
8.93%
---------
---------
$ 816,661
---------
---------
--
---------
---------
</TABLE>
71
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH SERIES FUND, INC.
Financial Highlights (Concluded)
================================================================================
<TABLE>
<CAPTION>
MULTIPLE STRATEGY PORTFOLIO
--------------------------------------------------------------------------
FOR THE YEAR ENDED DECEMBER 31,
--------------------------------------------------------------------------
1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------
THE FOLLOWING PER SHARE DATA AND RATIOS
HAVE BEEN DERIVED FROM INFORMATION
PROVIDED IN THE FINANCIAL STATEMENTS.
PER SHARE
OPERATING PERFORMANCE:
Net asset value, beginning of year........ $ 18.70 $ 18.32 $ 15.45 $ 15.56 $ 13.64
---------- ---------- ---------- ---------- ----------
Investment income -- net.................. .54 .61 .72 .99 .79
Realized and unrealized gain (loss) on
investments and foreign currency
transactions -- net (1)................. 2.30 .17 3.13 (.27) 2.02
---------- ---------- ---------- ---------- ----------
Total from investment operations.......... 2.84 .78 3.85 .72 2.81
---------- ---------- ---------- ---------- ----------
Less dividends and distributions:
Investment income -- net.................. (.88) (.32) (.98) (.83) (.89)
Realized gain on investments -- net....... (.82) (.08) -- -- --
---------- ---------- ---------- ---------- ----------
Total dividends and distributions......... (1.70) (.40) (.98) (.83) (.89)
---------- ---------- ---------- ---------- ----------
Net asset value, end of year.............. $ 19.84 $ 18.70 $ 18.32 $ 15.45 $ 15.56
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
TOTAL INVESTMENT RETURN:*
Based on net asset value per share........ 16.66% 4.35% 25.97% 4.91% 21.31%
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
RATIOS TO AVERAGE NET ASSETS:
Expenses, net of reimbursement............ .36% .40% .39% .41% .39%
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Expenses.................................. .36% .40% .39% .41% .39%
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Investment income -- net.................. 2.91% 3.26% 4.17% 6.07% 5.15%
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
SUPPLEMENTAL DATA:
Net assets, end of year (in thousands).... $1,237,336 $1,137,022 $1,152,395 $1,018,054 $1,163,578
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Portfolio turnover........................ 91.08% 67.71% 95.48% 106.39% 142.47%
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
</TABLE>
- ------------
* Total investment returns exclude the effects of sales loads.
(1) Foreign currency transaction amounts have been reclassified to conform to
the presentation.
See Notes to Financial Statements.
72
<PAGE>
- --------------------------------------------------------------------------------
================================================================================
<TABLE>
<CAPTION>
NATURAL RESOURCES PORTFOLIO
---------------------------------------------------------------
FOR THE YEAR ENDED DECEMBER 31,
---------------------------------------------------------------
1993 1992 1991 1990 1989
<S> <C> <C> <C> <C>
---------------------------------------------------------------
$ 7.01 $ 7.04 $ 7.18 $ 7.84 $ 6.43
-------- -------- -------- -------- -------
.13 .21 .27 .21 .19
.66 (.12) (.14) (.69) 1.41
-------- -------- -------- -------- -------
.79 .09 .13 (.48) 1.60
-------- -------- -------- -------- -------
(.27) (.12) (.27) (.18) (.19)
-- -- -- -- --
-------- -------- -------- -------- -------
(.27) (.12) (.27) (.18) (.19)
-------- -------- -------- -------- -------
$ 7.53 $ 7.01 $ 7.04 $ 7.18 $ 7.84
-------- -------- -------- -------- -------
-------- -------- -------- -------- -------
11.65% 1.35% 1.67% (6.18%) 25.23%
-------- -------- -------- -------- -------
-------- -------- -------- -------- -------
.50% .50% .50% .50% .50%
-------- -------- -------- -------- -------
-------- -------- -------- -------- -------
.59% .82% .74% .63% .64%
-------- -------- -------- -------- -------
-------- -------- -------- -------- -------
2.00% 2.84% 3.12% 2.76% 2.81%
-------- -------- -------- -------- -------
-------- -------- -------- -------- -------
$ 18,437 $ 7,987 $ 8,030 $ 11,256 $13,405
-------- -------- -------- -------- -------
-------- -------- -------- -------- -------
65.26% 32.14% 30.20% 56.60% 113.38%
-------- -------- -------- -------- -------
-------- -------- -------- -------- -------
</TABLE>
73
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH SERIES FUND, INC.
Notes to Financial Statements
================================================================================
1. SIGNIFICANT ACCOUNTING POLICIES:
Merrill Lynch Series Fund, Inc. (the "Fund") is registered under the Investment
Company Act of 1940 as a diversified, open-end investment management company.
The Fund offers its shares to Merrill Lynch Life Insurance Company, ML Life
Insurance Company of New York (indirect wholly-owned subsidiaries of Merrill
Lynch & Co., Inc.) and Monarch Life Insurance Company (an insurance company not
affiliated with Merrill Lynch & Co., Inc.) separate accounts to Fund benefits
under certain variable life insurance contracts. The following is a summary of
significant accounting policies followed by the Fund.
(a) Valuation of investments--All Portfolios: Investments maturing more than
sixty days after the valuation date are valued at the most recent bid price or
yield equivalent as obtained from dealers that make markets in such securities.
When such securities are valued with sixty days or less to maturity, the
difference between the valuation existing on the sixty-first day before maturity
and maturity value is amortized on a straight-line basis to maturity.
Investments maturing within sixty days from their date of acquisition are valued
at amortized cost, which approximates market. For the purpose of valuation, the
maturity of a variable rate certificate of deposit is deemed to be the next
coupon date on which the interest rate is to be adjusted.
Balanced, Capital Stock, Global Strategy, Growth Stock, High Yield, Intermediate
Government Bond, Long Term Corporate Bond, Multiple Strategy and Natural
Resources Portfolios: Portfolio securities which are traded on stock exchanges
are valued at the last sale price as of the close of business on the day the
securities are being valued or, lacking any sales, at the mean between closing
bid and asked prices. Securities other than money market securities traded in
the over-the-counter market are valued at the mean between the bid and asked
prices or yield equivalent as obtained from one or more dealers that make
markets in the securities. Portfolio securities which are traded both in the
over-the-counter market and on a stock exchange are valued according to the
broadest and most representative market, and it is expected that for debt
securities this ordinarily will be the over-the-counter market.
Options are valued at the last bid price in the case of options purchased and
the last asked price in the case of options written. Futures contracts are
valued at settlement price at the close of the applicable exchange. 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
Directors of the Fund.
(b) 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. Under the applicable
foreign tax law, a withholding tax may be imposed on interest, dividends and
capital gains at various rates.
(c) Security transactions and investment income--Security transactions are
recorded on the dates the transactions are entered into (the trade dates).
Dividend income is recorded on the ex-dividend dates, 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 premium and discount) is recognized on the
accrual basis. Realized gains and losses on security transactions are determined
on the identified cost basis.
(d) Prepaid registration fees--Prepaid registration fees are charged to expense
as the related shares are issued.
(e) Foreign currency transactions--Transactions denominated in foreign
currencies are recorded at the exchange rate prevailing when recognized. Assets
and liabilities denominated in foreign currencies are
74
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH SERIES FUND, INC.
Notes to Financial Statements (Continued)
================================================================================
valued at the exchange rate at the end of the period. Foreign currency
transactions are the result of settling (realized) or valuing (unrealized) such
transactions expressed in foreign currencies into US dollars. Realized and
unrealized gains or losses from investments include the effects of foreign
exchange rates on investments.
Global Strategy, Multiple Strategy and Natural Resources Portfolios are
authorized to enter into forward foreign exchange contracts as a hedge against
either specific transactions or portfolio positions. Such contracts are not
entered on the Portfolio's records. However, the effect on operations is
recorded from the date the Portfolio enters into such contracts. Premium or
discount is amortized over the life of the contracts.
(f) Dividends and distributions--Dividends and distributions paid by the Fund
are recorded on the ex-dividend dates.
(g) Options--When the Fund sells 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
transaction), 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 is less than or greater than the premium paid or received).
Written and purchased options are non-income producing investments.
(h) Reclassification--Certain 1992 amounts have been reclassified to conform to
the 1993 presentation.
2. INVESTMENT ADVISORY AGREEMENT AND TRANSACTIONS WITH AFFILIATES:
The Fund has entered into an Investment Advisory Agreement with Merrill Lynch
Asset Management ("MLAM"). MLAM is the name under which Merrill Lynch Investment
Management, Inc. ("MLIM") does business. MLIM is an indirect wholly-owned
subsidiary of Merrill Lynch & Co., Inc. MLAM is responsible for the management
of the Fund's portfolios 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 aggregate average
daily value of the ten combined Portfolio'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 the next $50 million, 0.40% of the next $100 million, 0.35% of the next
$400 million, and 0.30% of average daily net assets in excess of $800 million.
Effective January 1, 1994, the investment advisory business of MLAM was
reorganized from a corporation to a limited partnership. The general partner of
MLAM is Princeton Services, Inc., an indirect wholly-owned subsidiary of Merrill
Lynch & Co. The limited partners are Merrill Lynch & Co. and MLIM.
The Investment Advisory Agreement obligates MLAM to reimburse the Fund, if in
any year the aggregate ordinary operating expenses of any Portfolio exceed the
most restrictive expense limitations then in effect under any state securities
law or the regulations thereunder. Under the most restrictive state regulations
presently in effect, the Investment Adviser is required to reimburse each
Portfolio for advisory fees received by it from the Fund, to the extent that
such Portfolio's aggregate ordinary operating expenses (excluding interest,
taxes, brokerage fees and commissions, and extraordinary items) exceed in any
fiscal year 2.5% of the Portfolio's first $30 million of average daily net
assets, 2.0% of the next
75
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH SERIES FUND, INC.
Notes to Financial Statements (Continued)
================================================================================
$70 million of average daily net assets and 1.5% of the average daily net assets
in excess thereof. In addition, the Investment Adviser, Merrill Lynch Life
Agency, Inc. and Monarch Life Insurance Co. (Monarch) entered into an agreement
which provided that Monarch will reimburse the Fund's operating expenses other
than interest, taxes, brokerage fees and commissions and extraordinary items,
with respect to each Portfolio, to the extent that these expenses exceed 0.50%
of the Portfolio's average daily net assets. Monarch will also reimburse MLAM
for any amount MLAM is required to pay to the Fund by reduction of its fee
pursuant to the expense limitation provisions of the Investment Advisory
Agreement. For the year ended December 31, 1993, MLAM earned fees of $324,700,
of which $13,194 was reimbursed for the Global Strategy Portfolio and earned
fees of $47,974 of which $12,709 was reimbursed for the Natural Resources
Portfolio.
Merrill Lynch, Pierce, Fenner & Smith Inc. ("MLPF&S"), an affiliate of MLIM,
earned commissions on the execution of portfolio security transactions
aggregating $41,142 in the Capital Stock Portfolio, $49,283 in the Global
Strategy Portfolio, $9,280 in the Growth Stock Portfolio, $122,414 in the
Multiple Strategy Portfolio, and $3,157 in the Natural Resources Portfolio.
Financial Data Services, Inc. ("FDS"), a wholly-owned subsidiary of Merrill
Lynch & Co., Inc., is the Fund's transfer agent.
Accounting services are provided to the Fund by MLAM at cost.
Certain officers and/or directors of the Fund are officers and/or directors of
MLIM, FDS, MLPF&S, and/or Merrill Lynch & Co., Inc.
3. INVESTMENTS:
Purchases and sales of investments, excluding short-term securities, for the
year ended December 31, 1993 were as follows:
<TABLE>
<CAPTION>
INTERMEDIATE
CAPITAL GLOBAL GROWTH HIGH GOVERNMENT
BALANCED STOCK STRATEGY STOCK YIELD BOND
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
<S> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------
Total Purchases........ $ 38,055,046 $ 198,272,045 $ 113,832,666 $ 179,914,770 $ 76,333,588 $ 316,382,784
------------ ------------- ------------- ------------- ------------ -------------
------------ ------------- ------------- ------------- ------------ -------------
Total Sales............ $ 16,850,271 $ 210,049,135 $ 26,862,807 $ 204,130,845 $ 55,739,736 $ 308,076,729
------------ ------------- ------------- ------------- ------------ -------------
------------ ------------- ------------- ------------- ------------ -------------
<CAPTION>
LONG TERM
CORPORATE MULTIPLE NATURAL
BOND STRATEGY RESOURCES
PORTFOLIO PORTFOLIO PORTFOLIO
- -----------------------
Total Purchases........ $ 148,649,325 $ 919,429,015 $ 16,052,529
------------- -------------- ------------
------------- -------------- ------------
Total Sales............ $ 145,064,558 $1,034,082,678 $ 8,506,203
<S> <C> <C> <C>
------------- -------------- ------------
------------- -------------- ------------
</TABLE>
76
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH SERIES FUND, INC.
Notes to Financial Statements (Continued)
================================================================================
In the Capital Stock Portfolio, transactions in call options written for the
year ended December 31, 1993 were as follows:
<TABLE>
<CAPTION>
NUMBER OF
SHARES
CALL OPTIONS COVERED PREMIUMS
<S> <C> <C>
- -------------------------------------------------------------------------------------------------------------------
Outstanding options at beginning of year................................................ -- --
Options written......................................................................... 18,000 $ 43,850
Options exercised....................................................................... (13,000) (32,202)
Options expired......................................................................... (5,000) (11,648)
-------- ---------
Outstanding options at end of year...................................................... -- $ --
-------- ---------
-------- ---------
</TABLE>
As of December 31, 1993, unrealized appreciation/depreciation for Federal income
tax purposes was as follows:
<TABLE>
<CAPTION>
CAPITAL GLOBAL GROWTH
BALANCED STOCK STRATEGY STOCK HIGH YIELD
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------
Appreciated securities.................... $ 9,665,855 $ 43,425,341 $ 17,875,816 $ 10,967,217 $ 4,936,513
Depreciated securities.................... (134,951) (2,657,552) (3,140,900) (3,158,552) (3,069,543)
------------- ------------- ------------- ------------- -------------
Net unrealized
appreciation/depreciation............... $ 9,530,904 $ 40,767,789 $ 14,734,916 $ 7,808,665 $ 1,866,970
------------- ------------- ------------- ------------- -------------
------------- ------------- ------------- ------------- -------------
Cost of Federal income tax purposes....... $ 77,546,928 $ 184,555,904 $ 164,411,080 $ 116,207,036 $ 93,542,190
------------- ------------- ------------- ------------- -------------
------------- ------------- ------------- ------------- -------------
</TABLE>
<TABLE>
<CAPTION>
INTERMEDIATE LONG TERM
GOVERNMENT CORPORATE MONEY MULTIPLE NATURAL
BOND BOND RESERVE STRATEGY RESOURCES
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
<S> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------
Appreciated securities.................. $ 10,722,129 $ 6,980,056 $ 83,729 $ 205,133,386 $ 406,224
Depreciated securities.................. (1,047,623) (366,012) (72,189) (14,391,186) (828,312)
------------- ------------- ------------- -------------- -------------
Net unrealized
appreciation/depreciation............. $ 9,674,506 $ 6,614,044 $ 11,540 $ 190,742,200 $ (422,088)
------------- ------------- ------------- -------------- -------------
------------- ------------- ------------- -------------- -------------
Cost of Federal income tax purposes..... $ 270,056,124 $ 130,851,436 $ 545,581,139 $1,066,653,044 $ 18,000,677
------------- ------------- ------------- -------------- -------------
------------- ------------- ------------- -------------- -------------
</TABLE>
77
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH SERIES FUND, INC.
Notes to Financial Statements (Continued)
================================================================================
Net realized and unrealized gains (losses) as of December 31, 1993 were as
follows:
<TABLE>
<CAPTION>
BALANCED CAPITAL STOCK
PORTFOLIO PORTFOLIO GLOBAL STRATEGY
-------------------------- --------------------------- PORTFOLIO
REALIZED REALIZED UNREALIZED ---------------------------
GAINS UNREALIZED GAINS GAINS REALIZED UNREALIZED
(LOSSES) GAINS (LOSSES) (LOSSES) GAINS GAINS
<S> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------
Long-term investments....... $ 1,294,964 $ 9,532,275 $ 22,644,368 $ 40,767,789 $ 2,702,083 $ 14,734,916
Short-term investments...... (135) -- (215) -- -- --
Options..................... -- 11,647 -- -- --
Foreign currency
transactions............... -- -- (69,431) (468) 242,923 (13,603)
----------- ------------ ------------ ------------ ------------ ------------
Total....................... $ 1,294,829 $ 9,532,275 $ 22,586,369 $ 40,767,321 $ 2,945,006 $ 14,721,313
----------- ------------ ------------ ------------ ------------ ------------
----------- ------------ ------------ ------------ ------------ ------------
<CAPTION>
GROWTH STOCK HIGH YIELD
PORTFOLIO PORTFOLIO
------------------------- -------------------------
REALIZED REALIZED
GAINS UNREALIZED GAINS UNREALIZED
(LOSSES) GAINS (LOSSES) GAINS
<S> <C> <C> <C> <C>
- ----------------------------
Long-term investments.......$18,277,884 $7,808,665 $ 2,381,283 $1,867,907
Short-term investments...... (1,034) -- (114) --
Options..................... -- -- -- --
Foreign currency
transactions............... -- -- -- --
----------- ---------- ----------- ----------
Total.......................$18,276,850 $7,808,665 $ 2,381,169 $1,867,907
----------- ---------- ----------- ----------
----------- ---------- ----------- ----------
</TABLE>
4. CAPITAL SHARE TRANSACTIONS:
Transactions in capital shares were as follows:
<TABLE>
<CAPTION>
CAPITAL STOCK
BALANCED PORTFOLIO PORTFOLIO
-------------------------- ---------------------------
FOR THE YEAR ENDED DOLLAR DOLLAR
DECEMBER 31, 1993 SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------- ----------- ------------ ----------- -------------
<S> <C> <C> <C> <C>
Shares sold...................................... 2,187,445 $ 30,842,402 2,648,003 $ 61,600,015
Shares issued to shareholders in reinvestment of
dividends and distributions..................... 305,371 4,061,210 487,302 10,810,258
----------- ------------ ----------- -------------
Total issued..................................... 2,492,816 34,903,612 3,135,305 72,410,273
Shares redeemed.................................. (567,022) (8,001,609) (3,146,632) (73,358,694)
----------- ------------ ----------- -------------
Net increase (decrease).......................... 1,925,794 $ 26,902,003 (11,327) $ (948,421)
----------- ------------ ----------- -------------
----------- ------------ ----------- -------------
<CAPTION>
GLOBAL STRATEGY PORTFOLIO GROWTH STOCK PORTFOLIO
----------------------------- ---------------------------
FOR THE YEAR ENDED DOLLAR DOLLAR
DECEMBER 31, 1993 SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------- ------------ ------------- ----------- -------------
<S> <C> <C> <C> <C>
Shares sold...................................... 9,185,981 $ 133,326,793 2,765,508 $ 63,983,886
Shares issued to shareholders in reinvestment of
dividends and distributions..................... 266,275 3,467,673 326,625 7,410,995
------------ ------------- ----------- -------------
Total issued..................................... 9,452,256 136,794,466 3,092,133 71,394,881
Shares redeemed.................................. (1,577,997) (22,350,465) (3,907,138) (90,314,726)
------------ ------------- ----------- -------------
Net increase (decrease).......................... 7,874,259 $ 114,444,001 (815,005) $ (18,919,845)
------------ ------------- ----------- -------------
------------ ------------- ----------- -------------
</TABLE>
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DOLLAR DOLLAR
DECEMBER 31, 1992 SHARES AMOUNT SHARES AMOUNT SHARES
- ---------------------------------------------------- ----------- ------------ ----------- ------------- ---------
<S> <C> <C> <C> <C> <C>
Shares sold......................................... 1,722,366 $ 22,542,311 2,743,359 $ 61,172,758 2,425,328
Shares issued to shareholders in reinvestment of
dividends and distributions........................ 106,452 1,357,264 253,201 5,653,979 63,376
----------- ------------ ----------- ------------- ---------
Total issued........................................ 1,828,818 23,899,575 2,996,560 66,826,737 2,488,704
Shares redeemed..................................... (604,693) (7,880,119) (1,873,219) (41,244,803) (784,429)
----------- ------------ ----------- ------------- ---------
Net increase (decrease)............................. 1,224,125 $ 16,019,456 1,123,341 $ 25,581,934 1,704,275
----------- ------------ ----------- ------------- ---------
----------- ------------ ----------- ------------- ---------
<CAPTION>
FOR THE YEAR ENDED DOLLAR DOLLAR
DECEMBER 31, 1992 AMOUNT SHARES AMOUNT
- ---------------------------------------------------- ------------- ----------- -------------
<S> <C> <C> <C>
Shares sold......................................... $ 31,779,404 4,064,175 $ 91,226,086
Shares issued to shareholders in reinvestment of
dividends and distributions........................ 813,115 26,452 600,992
------------- ----------- -------------
Total issued........................................ 32,592,519 4,090,627 91,827,078
Shares redeemed..................................... (10,241,968) (3,170,056) (69,642,290)
------------- ----------- -------------
Net increase (decrease)............................. $ 22,350,551 920,571 $ 22,184,788
------------- ----------- -------------
------------- ----------- -------------
</TABLE>
78
<PAGE>
- --------------------------------------------------------------------------------
================================================================================
<TABLE>
<CAPTION>
INTERMEDIATE LONG TERM
GOVERNMENT CORPORATE MONEY RESERVE
BOND PORTFOLIO BOND PORTFOLIO PORTFOLIO
--------------------------- --------------------------- ------------------------
REALIZED UNREALIZED REALIZED UNREALIZED REALIZED UNREALIZED
GAINS GAINS GAINS GAINS GAINS GAINS
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------
$ 9,062,256 $9,674,506 $ 4,818,952 $6,614,044 -- --
-- -- -- $ 165,799 $ 11,540
-- -- -- -- --
-- -- -- -- --
----------- ----------- ----------- ----------- --------- --------
$ 9,062,256 $9,674,506 $ 4,818,952 $6,614,044 $ 165,799 $ 11,540
----------- ----------- ----------- ----------- --------- --------
----------- ----------- ----------- ----------- --------- --------
<CAPTION>
MULTIPLE STRATEGY NATURAL RESOURCES
PORTFOLIO PORTFOLIO
----------------------------- ------------------------
GAINS GAINS GAINS UNREALIZED
(LOSSES) (LOSSES) (LOSSES) LOSSES
<S> <C> <C> <C>
-----------------------------------------------------------
$135,003,348 $ 190,742,200 $ 536,304 $(422,088)
(1,099) -- (48) --
-- -- -- --
3,516,731 (87,352) (11) --
------------ ------------- --------- ---------
$138,518,980 $ 190,654,848 $ 536,245 $(422,088)
------------ ------------- --------- ---------
------------ ------------- --------- ---------
</TABLE>
<TABLE>
<CAPTION>
INTERMEDIATE
GOVERNMENT BOND LONG TERM CORPORATE
HIGH YIELD PORTFOLIO PORTFOLIO BOND PORTFOLIO
--------------------------- --------------------------- ---------------------------
DOLLAR DOLLAR DOLLAR
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------ ---------- ------------
<S> <C> <C> <C> <C> <C>
6,585,394 $ 62,046,849 2,029,675 $ 24,294,769 1,569,886 $ 19,535,581
907,939 8,491,599 1,969,544 23,337,471 882,536 10,902,257
---------- ------------ ---------- ------------ ---------- ------------
7,493,333 70,538,448 3,999,219 47,632,240 2,452,422 30,437,838
(5,176,485) (48,772,584) (3,241,514) (38,929,705) (1,897,253) (23,826,435)
---------- ------------ ---------- ------------ ---------- ------------
2,316,848 $ 21,765,864 757,705 $ 8,702,535 555,169 $ 6,611,403
---------- ------------ ---------- ------------ ---------- ------------
---------- ------------ ---------- ------------ ---------- ------------
<CAPTION>
MULTIPLE STRATEGY NATURAL RESOURCES
MONEY RESERVE PORTFOLIO PORTFOLIO PORTFOLIO
----------------------------- --------------------------- --------------------------
DOLLAR DOLLAR DOLLAR
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
----------- ------------- ---------- ------------ ---------- -----------
<S> <C> <C> <C> <C> <C>
159,076,748 $ 159,076,741 1,154,463 $ 21,097,663 4,270,081 $33,052,306
17,903,470 17,903,477 6,022,981 104,451,021 51,252 362,042
----------- ------------- ----------- ------------- ---------- -----------
176,980,218 176,980,218 7,177,444 125,548,684 4,321,333 33,414,348
(277,399,558) (277,399,558) (5,632,176) (103,089,686) (3,013,454) (23,296,035)
------------ ------------ ---------- ------------ ---------- -----------
(100,419,340) $(100,419,340) 1,545,268 $ 22,458,998 1,307,879 $10,118,313
------------ ------------- ---------- ------------ ---------- -----------
------------ ------------- ---------- ------------ ---------- -----------
</TABLE>
<TABLE>
<CAPTION>
DOLLAR DOLLAR DOLLAR DOLLAR
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
---------- ----------- ---------- ----------- ---------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
4,629,237 $41,578,702 3,091,994 $35,850,914 1,890,547 $22,559,602 108,278,635 $108,278,635
770,806 6,884,110 1,616,169 18,699,652 813,965 9,648,937 26,901,555 26,901,555
---------- ----------- ---------- ----------- ---------- ----------- ------------ ------------
5,400,043 48,462,812 4,708,163 54,550,566 2,704,512 32,208,539 135,180,190 135,180,190
(3,976,101) (36,056,312) (3,958,250) (45,942,982) (2,837,379) (33,758,181) (286,082,739) (286,082,739)
---------- ----------- ---------- ----------- ---------- ----------- ------------ ------------
1,423,942 $12,406,500 749,913 $ 8,607,584 (132,867) $(1,549,642) (150,902,549) $(150,902,549)
---------- ----------- ---------- ----------- ---------- ----------- ------------ -------------
---------- ----------- ---------- ----------- ---------- ----------- ------------ -------------
<CAPTION>
DOLLAR DOLLAR
SHARES AMOUNT SHARES AMOUNT
---------- ----------- ---------- ----------
<S> <C> <C> <C>
1,684,759 $30,314,502 1,125,451 $7,767,245
1,398,597 24,923,007 20,090 134,606
---------- ----------- ---------- ----------
3,083,356 55,237,509 1,145,541 7,901,851
(5,180,175) (92,679,542) (1,145,788) (7,942,201)
---------- ----------- ---------- ----------
(2,096,819) $(37,442,033) (247) $ (40,350)
---------- ----------- ---------- ----------
---------- ----------- ---------- ----------
</TABLE>
79
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH SERIES FUND, INC.
Notes to Financial Information (Concluded)
================================================================================
5. CAPITAL LOSS CARRYFORWARD:
At December 31, 1993, the Fund had capital loss carryforwards of approximately
$3,942,000 in the High Yield Portfolio, of which $3,593,000 expires in 1998, and
$349,000 expires in 1999; $12,060,000 in the Natural Resources Portfolio, of
which $8,359,000 expires in 1996, $2,063,000 expires in 1997, $1,187,000 expires
in 1998, $155,000 expires in 1999, and $296,000 expires in the year 2000. These
will be available to offset like amounts of any future taxable capital gains.
6. LOANED SECURITIES:
At December 31, 1993, the Intermediate Government Bond Portfolio held US
Treasury Bills having an aggregate value of approximately $14,271,000 as
collateral for portfolio securities loaned having a market value of
approximately $14,810,000; the Long Term Corporate Bond Portfolio held US
Treasury Notes having an aggregate value of approximately $4,226,000 as
collateral for portfolio securities loaned having a market value of
approximately $4,078,000.
7. SUBSEQUENT EVENT:
On January 3, 1994, the Board of Directors declared dividends and distributions
per share payable on January 3, 1994 to shareholders of record as of December
31, 1993 as follows:
<TABLE>
<CAPTION>
NET INVESTMENT REALIZED
INCOME CAPITAL GAINS
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------
FUND
Balanced Portfolio................................................................. $ 0.275988 $0.180308
Capital Stock Portfolio............................................................ 0.133785 2.602735
Global Strategy Portfolio.......................................................... 0.194657 0.227963
Growth Stock Portfolio............................................................. 0.170896 3.647451
High Yield Portfolio............................................................... -- --
Intermediate Government Bond Portfolio............................................. 0.101106 0.295381
Long Term Corporate Bond Portfolio................................................. 0.223845 0.211849
Money Reserve Portfolio............................................................ -- --
Multiple Strategy Portfolio........................................................ 0.317012 2.157007
Natural Resources Portfolio........................................................ 0.069936 --
</TABLE>
80
<PAGE>
PART C. OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS.
No statement of sources of net assets is included because the full amount
of net assets at December 31, 1993 represents cash received from issuance of
shares (less cost of capital shares redeemed).
(a) Financial Statements contained in Part A:
Financial Highlights:
Balanced Portfolio for the period May 1, 1988* to December 31, 1988
and each of the years in the five year period ended December 31,
1993.
Capital Stock Portfolio for each of the years in the ten year period
ended December 31, 1993.
Global Strategy Portfolio for the period July 1, 1987* to December
31, 1987 and each of the years in the six year period ended
December 31, 1993.
Growth Stock Portfolio for each of the years in the ten year period
ended December 31, 1993.
High Yield Portfolio for the period May 1, 1986* to December 31, 1986
and each of the years in the seven year period ended December 31,
1993.
Intermediate Government Bond Portfolio for each of the years in the
ten year period ended December 31, 1993.
Long Term Corporate Bond Portfolio for each of the years in the ten
year period ended December 31, 1993.
Money Reserve Portfolio for each of the years in the ten year period
ended December 31, 1993.
Multiple Strategy Portfolio for the period May 2, 1985* to December
31, 1985 and each of the years in the eight year period ended
December 31, 1993.
Natural Resources Portfolio for the period July 1, 1987* to December
31, 1987 and each of the years in the six year period ended
December 31, 1993.
Contained in Part B:
With respect to each of the Fund's Portfolios:
Schedules of Investments as of December 31, 1993.
Statements of Assets and Liabilities as of December 31, 1993.
Statements of Operations for the year ended December 31, 1993.
Statements of Changes in Net Assets for the years ended December 31,
1993 and 1992.
Financial Highlights for each of the years in the five year period
ended December 31, 1993.
- ------------
* Commencement of operations.
C-1
<PAGE>
(b) Exhibits:
<TABLE> <CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------------- ----------------------------------------------------------------------------------------------------
<S> <C>
1(a) Articles of Incorporation of Registrant (a)
1(b) Articles of Amendment to Registrant's Articles of Incorporation (b)
Articles of Amendment to Registrant's Articles of Incorporation increasing the number of authorized
1(c) shares of Registrant (c)
1(d) Certificate of Correction of Articles of Amendment of Registrant (d)
Articles Supplementary to Registrant's Articles of Incorporation relating to the redesignation of
1(e) shares of common stock as Multiple Strategy Portfolio Common Stock (e)
Articles Supplementary to Registrant's Articles of Incorporation relating to the redesignation of
1(f) shares of common stock as High Yield Portfolio Common Stock (f)
Form of Articles Supplementary to Registrant's Articles of Incorporation relating to the
redesignation of shares of common stock as Natural Resources Portfolio Common Stock and Global
1(g) Strategy Portfolio Common Stock (g)
Form of Articles of Amendment to Registrant's Articles of Incorporation increasing the number of
1(h) authorized shares of Registrant (h)
Articles Supplementary to Registrant's Articles of Incorporation relating to the redesignation of
shares of common stock as Balanced Portfolio Common Stock and increasing the authorized number of
1(i) shares of Money Reserve Portfolio Common Stock (i)
2 By-Laws of Registrant(j)
3 None
4 Specimen certificate for shares of common stock of Registrant (k)
5 Investment Advisory Agreement (11)
6 Form of Amended Distribution Agreement (m)
7 None
8 Form of Custodian Agreement (n)
9(a) Form of Transfer Agency, and Dividend Disbursing Agreement (o)
9(b) Form of Agreement relating to the use of the "Merrill Lynch" name (p)
9(c) Form of Amendment to Reimbursement Agreement (q)
10 Opinion of Rogers & Wells (filed with Rule 24f-2 notice on February 28, 1994)
11 Consent of Deloitte & Touche
12 None
13 None
14 None
15 None
16 Calculation of Performance Data (r)
</TABLE>
- ------------
<TABLE>
<S> <C>
(a) Incorporated by reference to Exhibit 1(a) filed with Pre-Effective Amendment No. 2 to Registrant's
Registration Statement on Form N-1 ("Amendment No. 2").
(b) Incorporated by reference to Exhibit 1(b) filed with Amendment No. 2.
(c) Incorporated by reference to Exhibit 1(c) filed with Post-Effective Amendment No. 4 to Registrant's
Registration Statement on Form N-1A ("Post-Effective Amendment No. 4").
(d) Incorporated by reference to Exhibit 1(d) filed with Post-Effective Amendment No. 4.
(e) Incorporated by reference to Exhibit 1(e) filed with Post-Effective Amendment No. 4.
(f) Incorporated by reference to Exhibit 1(f) filed with Post-Effective Amendment No. 5 to Registrant's
Registration Statement on Form N-1A ("Post-Effective Amendment No. 5").
(g) Incorporated by reference to Exhibit 1(g) filed with Post-Effective Amendment No. 6 to Registrant's
Registration Statement on Form N-1A.
</TABLE>
(Footnotes continued on following page)
C-2
<PAGE>
(Footnotes continued from preceding page)
<TABLE>
<S> <C>
(h) Incorporated by reference to Exhibit 1(h) filed with Post-Effective Amendment No. 9 to Registrant's
Registration Statement on Form N-1A ("Post-Effective Amendment No. 9").
(i) Incorporated by reference to Exhibit 1(i) filed with Post-Effective Amendment No. 9.
(j) Incorporated by reference to Exhibit 2 filed with Post-Effective Amendment No. 15.
(k) Incorporated by reference to Exhibit 4 filed with Post-Effective Amendment No. 5.
(l) Incorporated by reference to Exhibit 5 filed with Post-Effective Amendment No. 2.
(m) Incorporated by reference to Exhibit 6 filed with Post-Effective Amendment No. 5.
(n) Incorporated by reference to Exhibit 8 filed with Post-Effective Amendment No. 1 to Registrant's Registration
Statement on Form N-1 ("Post-Effective Amendment No. 1").
(o) Incorporated by reference to Exhibit 9(a) filed with Post-Effective Amendment No. 1.
(p) Incorporated by reference to Exhibit 9(b) filed with Amendment No. 2.
(q) Incorporated by reference to Exhibit 9(c) filed with Post-Effective Amendment No. 5.
(r) Incorporated by reference to Exhibit 16 filed with Post-Effective Amendment No. 10.
</TABLE>
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.
Registrant does not control any other person. Except that all of
Registrant's issued and outstanding shares are and will be held by Monarch Life
Insurance Company for its Variable Account A, the Registrant is not under common
control with any other person.
ITEM 26. NUMBERS OF HOLDERS OF SECURITIES.
<TABLE> <CAPTION>
NUMBER OF RECORD HOLDERS
TITLE OF CLASS AT MARCH 31, 1994
- ------------------------------------------------------------ -------------------------------
<S> <C>
Common stock, par value $0.10 per share
Balanced Portfolio........................................ 5
Capital Stock Portfolio................................... 5
Global Strategy Portfolio................................. 5
Growth Stock Portfolio.................................... 5
High Yield Portfolio...................................... 5
Intermediate Government Bond Portfolio.................... 5
Long Term Corporate Bond Portfolio........................ 5
Money Reserve Portfolio................................... 5
Multiple Strategy Portfolio............................... 5
Natural Resources Portfolio............................... 5
</TABLE>
ITEM 27. INDEMNIFICATION.
Under Section 2-418 of the Maryland General Corporation Law, with respect
to any proceedings against a present or former director, officer, agent or
employee (a "corporate representative") of the Registrant, except a proceeding
brought by or on behalf of the Registrant, the Registrant may indemnify the
corporate representative against expenses, including attorneys' fees and
judgments, fines and amounts paid in settlement actually and reasonably incurred
by the corporate representative in connection with the proceeding, if: (i) he
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Registrant; and (ii) with respect to any
criminal proceeding, he had no reasonable cause to believe his conduct was
unlawful. The Registrant is also authorized under Section 2-418 of the Maryland
General Corporation Law to indemnify a corporate representative under certain
circumstances against expenses incurred in connection with the defense of a suit
or action by or in the right of the Registrant. Under the Distribution
Agreement, the Registrant has agreed to indemnify the Distributor against any
loss, liability, claim, damage or expense arising out of any untrue statement of
a material fact, or an omission to state a material fact, in any registration
statement, prospectus or report to shareholders of the Registrant. Reference is
made to Article VI of Registrant's Certificate of Incorporation, Article VI of
Registrant's By-Laws, Section 2-418 of the
C-3
<PAGE>
Maryland General Corporation Law and Section 9 of the Distribution Agreement.
The Registrant has obtained an officers' and directors' liability insurance
policy for its officers and directors.
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER.
Merrill Lynch Asset Management, L.P. "MLAM" (the "Investment Adviser") acts
as the investment adviser for the following registered investment companies:
Merrill Lynch Adjustable Rate Securities Fund, Inc., Merrill Lynch Americas
Income Fund, Merrill Lynch U.S. Treasury Money Fund, Merrill Lynch Balanced Fund
for Investment and Retirement, Merrill Lynch Growth Fund for Investment and
Retirement, Merrill Lynch Capital Fund, Inc., Merrill Lynch Developing Capital
Markets Fund, Inc., Merrill Lynch Dragon Fund, Inc., Merrill Lynch EuroFund,
Merrill Lynch Fund for Tomorrow, Inc., Merrill Lynch Pacific Fund, Inc., Merrill
Lynch Ready Assets Trust, Merrill Lynch Retirement Series Trust, Merrill Lynch
Series Fund, Inc., Merrill Lynch Variable Series Funds, Inc., Merrill Lynch
Municipal Series Trust, Merrill Lynch Global Convertible Fund, Merrill Lynch
Global Allocation Fund, Inc., Merrill Lynch Global Holdings, Inc., Merrill Lynch
Strategic Dividend Fund, Convertible Holdings Inc., Merrill Lynch U.S.A.
Government Reserves, Merrill Lynch Global Bond Fund for Investment and
Retirement, Merrill Lynch Short-Term Global Income Fund, Inc., Merrill Lynch
High Income Municipal Bond Fund, Inc., Merrill Lynch Global Utility Fund, Inc.,
Merrill Lynch Institutional Intermediate Fund, Inc., Merrill Lynch International
Equity Fund, Merrill Lynch Fundamental Growth Fund, Inc., Merrill Lynch
Healthcare Fund, Inc. (residents of Wisconsin must meet suitability
requirements), Merrill Lynch Latin America Fund, Inc., Merrill Lynch Senior
Floating Rate Fund, and Merrill Lynch Technology Fund. Fund Asset Management, L.
P. ("FAM"), an affiliate of the Investment Adviser, acts as the investment
adviser for the following registered investment companies: Merrill Lynch Basic
Value Fund, Inc., CBA Money Fund, CMA Money Fund, CMA Tax-Exempt Fund, CMA
Government Securities Fund, CMA Multi-State Municipal Series Trust, CMA Treasury
Fund, MuniVest Fund, Inc., MuniVest Fund II, Inc., Merrill Lynch World Income
Fund, Inc., Merrill Lynch Federal Securities Trust, Merrill Lynch Corporate Bond
Fund, Inc., Merrill Lynch Phoenix Fund, Inc., Merrill Lynch Municipal Bond Fund,
Inc., Merrill Lynch Special Value Fund, Inc., The Corporate Fund Accumulation
Program, Inc., The Municipal Fund Accumulation Program, Inc., Corporate High
Yield Fund, Inc., Corporate High Yield Fund II, Inc., MuniAssets Fund, Inc.,
MuniBond Income Fund, Inc., MuniVest California Insured Fund II, Inc., MuniVest
California Insured Fund, Inc., MuniVest Florida Fund, MuniVest Michigan Insured
Fund, Inc., MuniVest New Jersey Fund, Inc., MuniVest New York Insured Fund,
Inc., MuniVest Pennsylvania Insured Fund, Inc., MuniYield Arizona Fund, Inc.,
MuniYield Arizona Fund II, Inc., MuniYield California Insured Fund II, Senior
High Income Portfolio, Senior High Income Portfolio II, MuniEnhanced Fund, Inc.,
MuniInsured Fund, Inc., Merrill Lynch California Municipal Series Trust, Apex
Municipal Fund Inc., Merrill Lynch Multi-State Municipal Series Trust, Financial
Institutions Series Trust, Taurus MuniCalifornia Holdings, Inc., Taurus MuniNew
York Holdings, Inc., Income Opportunities Fund 1999, Inc., Income Opportunities
Fund 2000, Inc., Merrill Lynch Funds for Institutions Series, MuniYield
California Fund, Inc., MuniYield California Insured Fund, Inc., MuniYield
Florida Fund, MuniYield Florida Insured Fund, MuniYield Insured Fund, Inc.,
MuniYield Insured Fund II, Inc., MuniYield Michigan Fund, Inc., MuniYield
Michigan Insured Fund, Inc., MuniYield New Jersey Fund, Inc., MuniYield New
Jersey Insured Fund, Inc., MuniYield New York Insured Fund, Inc., MuniYield
Pennsylvania Fund, Inc., MuniYield Fund, Inc., MuniYield Quality Fund, Inc., and
MuniYield Quality Fund II, Inc. The address of each of these investment
companies is Box 9011, Princeton, New Jersey 08543-9011, except that the address
of Merrill Lynch Funds For Institutions Series, Merrill Lynch Institutional
Intermediate Fund, and Merrill Lynch Trust Fund is One Financial Center, 15th
Floor, Boston, Massachusetts 02111-2646. The address of Merrill Lynch, Pierce,
Fenner & Smith Incorporated ("Merrill Lynch") and Merrill Lynch & Co., Inc. ("ML
& Co.") is World Financial Center, North Tower, 250 Vesey Street, New York, New
York 10281.
Set forth below is a list of each executive officer and director of the
Investment Adviser indicating each business, profession, vocation or employment
of a substantial nature in which each such person has
C-4
<PAGE>
been engaged since November 1, 1988 for his own account or in the capacity of
director, officer, partner or trustee. In addition, Mr. Zeikel is President and
Mr. Richard is Treasurer of all or substantially all of the investment companies
described in the preceding paragraph. Messrs. Durnin, Giordano, Glenn, Harvey,
Hewitt, Kirstein and Monagle are directors or officers of one or more of such
companies.
<TABLE> <CAPTION>
POSITION WITH OTHER SUBSTANTIAL BUSINESS,
NAME INVESTMENT ADVISER PROFESSION, VOCATION OR EMPLOYMENT
- --------------------------- ------------------------------ ----------------------------------------------------
<S> <C> <C>
Arthur Zeikel.............. President and Director President and Director of FAM since 1977; President
of the Investment Adviser since 1977 and Director
and Chief Investment Officer since 1976; President
and Director of Princeton Services; Executive Vice
President of Merrill Lynch and Executive Vice
President of ML & Co., Inc.; Director of MLFD.
Terry K. Glenn............. Executive Vice President and Executive Vice President and Director of FAM;
Director President and Director of MLFD; Executive Vice
President of Princeton Services; President of
Princeton Administrators, Inc. and Director of
Financial Data Services, Inc.
Robert W. Crook............ Senior Vice President Senior Vice President of MLFD since 1990; Vice
President of MLAM and MLFD
Bernard J. Durnin.......... Senior Vice President Senior Vice President of FAM; Senior Vice President
of Princeton Services since 1993.
Vincent R. Giordano........ Senior Vice President Senior Vice President of FAM; Senior Vice President
of Princeton Services since 1993.
Norman R. Harvey........... Senior Vice President Senior Vice President of FAM; Senior Vice President
of Princeton Services since 1993.
N. John Hewitt............. Senior Vice President Senior Vice President of FAM; Senior Vice President
of Princeton Services since 1993.
Philip L. Kirstein......... Senior Vice President, General Senior Vice President, General Counsel, Secretary
Counsel, Secretary and and Director of FAM; Senior Vice President of
Director Princeton Services since 1993.
Ronald M. Kloss............ Senior Vice President Senior Vice President and Controller of FAM; Senior
Vice President of Princeton Services since 1993.
Stephen M. M. Miller....... Senior Vice President Executive Vice President of Princeton
Administrators, Inc. since 1989; Senior Vice
President of Princeton Services since 1993; Vice
President and Secretary of Merrill Lynch from 1982
to 1989; Secretary of ML & Co. from 1982 to 1989
Joseph T. Monagle, Jr...... Senior Vice President Senior Vice President of FAM; Senior Vice President
of Princeton Services since 1993.
Gerald M. Richard.......... Senior Vice President and Senior Vice President and Treasurer of FAM; Senior
Treasurer Vice President of Princeton Services since 1993;
Vice President and Treasurer of MLFD
</TABLE>
C-5
<PAGE>
<TABLE> <CAPTION>
POSITION WITH OTHER SUBSTANTIAL BUSINESS,
NAME INVESTMENT ADVISER PROFESSION, VOCATION OR EMPLOYMENT
- --------------------------- ------------------------------ ----------------------------------------------------
<S> <C> <C>
Richard L. Rufener......... Senior Vice President Senior Vice President of MLAM; Senior Vice President
of Princeton Services since 1993; Vice President
of MLFD
Ronald Welburn............. Senior Vice President Senior Vice President of FAM; Senior Vice President
of Princeton Services since 1993.
Anthony Wiseman............ Senior Vice President Senior Vice President of FAM; Senior Vice President
of Princeton Services since 1993.
</TABLE>
ITEM 29. PRINCIPAL UNDERWRITERS.
(a) MLFD acts as the principal underwriter for the Registrant and for each
of the investment companies referred to in the first paragraph of Item 28 except
Apex Municipal Fund, Inc., CBA Money Fund, CMA Government Securities Fund, CMA
Money Fund, CMA Multi-State Municipal Series Trust, CMA Tax-Exempt Fund, CMA
Treasury Fund, Convertible Holdings, Inc., The Corporate Fund Accumulation
Program, Inc., Corporate High Yield Fund, Inc., Corporate High Yield Fund II,
Inc., Emerging Tigers Fund, Inc., Income Opportunities Fund 1999, Inc., Income
Opportunities Fund 2000, Inc., MuniAssets Fund, Inc., MuniBond Income Fund,
Inc., The Municipal Fund Accumulation Program, Inc., MuniEnhanced Fund, Inc.,
MuniInsured Fund, Inc., MuniVest Fund, Inc., MuniVest Fund II, Inc., MuniVest
California Insured Fund, Inc., MuniVest Florida Fund, MuniVest Michigan Insured
Fund, Inc., MuniVest New Jersey Fund, Inc., MuniVest New York Insured Fund,
Inc., MuniVest Pennsylvania Fund, MuniYield Arizona Fund, MuniYield Arizona Fund
II, Inc., MuniYield California Fund, Inc., MuniYield California Insured Fund,
Inc., MuniYield Florida Fund, MuniYield Florida Insured Fund, MuniYield Fund,
Inc., MuniYield Insured Fund, Inc., MuniYield Insured Fund II, Inc., MuniYield
Michigan Fund, Inc., MuniYield Michigan Insured Fund, Inc., MuniYield New Jersey
Fund, Inc., MuniYield New Jersey Insured Fund, Inc., MuniYield New York Insured
Fund, Inc., MuniYield New York Insured Fund II, Inc., MuniYield New York Insured
Fund III, Inc., MuniYield Pennsylvania Fund, MuniYield Quality Fund, Inc.,
MuniYield Quality Fund II, Inc., Senior High Income Portfolio Inc., Senior High
Income Portfolio II, Inc., Taurus MuniCalifornia Holdings, Inc., Taurus MuniNew
York Holdings, Inc., and Worldwide DollarVest, Inc.
(b) Set forth below is information concerning each director and officer of MLFD.
The principal business address of each such person is Box 9011, Princeton, New
Jersey 08543-9011, except that the
C-6
<PAGE>
address of Officers Crook, Aldrich, Graczyk, Brady, Breen, Fatseas, Wasel,
Maguire and Schena is One Financial Center, Boston, Massachusetts 02111-2633.
<TABLE> <CAPTION>
(2) (3)
(1) POSITIONS AND OFFICES POSITIONS AND OFFICES
NAME WITH UNDERWRITER WITH REGISTRANT
- --------------------------- ---------------------------- --------------------------
<S> <C> <C>
Terry K. Glenn............. President President and Director
Arthur Zeikel.............. Director None
Philip L. Kirstein......... Director None
William E. Aldrich......... Senior Vice President None
Robert W. Crook............ Senior Vice President None
Richard L. Rufener......... Vice President None
Gerald M. Richard.......... Vice President and Treasurer Treasurer
Salvatore Venezia.......... Vice President None
Vice President and
Sharon Creveling........... Assistant Treasurer None
Mark A. DeSario Vice President None
Michelle T. Lau............ Vice President None
Michael J. Brady........... Vice President None
William M. Breen........... Vice President None
James T. Fatseas........... Vice President None
Stanley Graczyk............ Vice President None
William Wasel.............. Vice President None
Debra W. Landsman-Yaros.... Vice President None
Mark E. Maguire............ Assistant Vice President None
Patricia A. Schena......... Assistant Vice President None
Robert Harris.............. Secretary None
</TABLE>
(c) Not applicable.
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS.
All accounts, books and other documents required to be maintained by
Section 31(a) of the Investment Company Act of 1940 and the Rules thereunder
will be maintained at the offices of the Registrant and its Custodian and
Transfer Agent.
ITEM 31. MANAGEMENT SERVICES.
Other than as set forth under the caption "Management of the
Fund--Management and Advisory Arrangements" in the Prospectus constituting Part
A of the Registration Statement and under the caption "Management of the
Fund--Management and Advisory Arrangements" in the Statement of Additional
Information constituting Part B of the Registration Statement, Registrant is not
a party to any management-related service contract.
ITEM 32. UNDERTAKINGS.
The Registrant undertakes to furnish each person to whom a prospectus is
delivered with a copy of the Registrant's latest annual report to shareholders,
upon request, and without charge.
C-7
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all the
requirements for effectiveness of this Post-Effective Amendment to its
Registration Statement pursuant to Rule 485(b) under the Securities Act of 1933
and has duly caused this Post-Effective Amendment to its Registration Statement
to be signed on its behalf by the undersigned, thereunto duly authorized, in the
Township of Plainsboro, and State of New Jersey, on the 28th day of April, 1993.
MERRILL LYNCH SERIES FUND, INC.
By /s/ TERRY K. GLENN
...................................
(Terry K. Glenn, President)
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment to the Registrant's Registration Statement has been
signed below by the following persons in the capacities and on the dates
indicated.
<TABLE> <CAPTION>
SIGNATURES TITLE DATE
- --------------------------------------------------- ----------------------------------------- -----------------
<S> <C> <C>
/s/ TERRY K. GLENN President and Director (Principal
................................................... Executive Officer)
(Terry K. Glenn) April 28, 1994
/s/ GERALD M. RICHARD Treasurer (Principal Financial and
................................................... Accounting Officer)
(Gerald M. Richard) April 28,1994
JACK B. SUNDERLAND* Director
...................................................
(Jack B. Sunderland) April 28, 1994
STEPHEN B. SWENSRUD* Director
...................................................
(Stephen B. Swensrud) April 28, 1994
J. THOMAS TOUCHTON* Director
...................................................
(J. Thomas Touchton) April 28, 1994
*By /s/ GERALD M. RICHARD
...................................................
Gerald M. Richard,
Attorney-in-Fact
</TABLE>
C-8
<PAGE>
INDEPENDENT AUDITORS' CONSENT
MERRILL LYNCH SERIES FUND, INC.
We consent to the use in Post-Effective Amendment No. 16 to Registration
Statement No. 2-69062 of our report dated February 23, 1994 appearing in the
Statement of Additional Information, which is a part of such Registration
Statement, and to the reference to us under the caption "Financial Highlights"
appearing in the Prospectus, which also is a part of such Registration
Statement.
DELOITTE & TOUCHE
Princeton, New Jersey
April 22, 1994
C-9
