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Merrill Lynch Variable
Series Funds, Inc.
INVESTMENT PORTFOLIOS
AVAILABLE WITH THE MERRILL
LYNCH FUNDS RETIREMENT
PLUS VARIABLE ANNUITY:
American Balanced Fund
Basic Value Focus Fund
Developing Capital Markets Focus Fund
Domestic Money Market Fund
Equity Growth Fund
Flexible Strategy Fund
Global Strategy Focus Fund
Global Utility Focus Fund
High Current Income Fund
Intermediate Government Bond Fund
International Bond Fund
International Equity Focus Fund
Natural Resources Focus Fund
Prime Bond Fund
Quality Equity Fund
Reserve Assets Fund
World Income Focus Fund
INVESTMENT PORTFOLIOS
AVAILABLE WITH THE PORTFOLIO
PLUS VARIABLE ANNUITY:
American Balanced Fund
Equity Growth Fund
Flexible Strategy Fund
High Current Income Fund
Natural Resources Focus Fund
Prime Bond Fund
Quality Equity Fund
Reserve Assets Fund
INVESTMENT PORTFOLIOS
AVAILABLE WITH THE MERRILL
LYNCH FUNDS INVESTOR LIFE,
INVESTOR LIFE PLUS AND
ESTATE INVESTOR I & II
VARIABLE LIFE INSURANCE
POLICIES:
Basic Value Focus Fund
Developing Capital Markets Focus Fund
Global Utility Focus Fund
International Bond Fund
International Equity Focus Fund
World Income Focus Fund
Annual Report
December 31, 1994
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This report is not authorized for use as an offer of sale or a solicitation
of an offer to buy shares of the Funds unless accompanied or preceded by the
Funds' current prospectus. Past performance results shown in this report should
not be considered a representation of future performance. Investment return and
principal value of non-money market fund shares will fluctuate so that shares,
when redeemed, may be worth more or less than their original cost. For Domestic
Money Market Fund and Reserve Assets Fund, the Funds seek to maintain a
consistent $1.00 net asset value per share, although this cannot be assured. An
investment in the Funds is neither insured nor guaranteed by the US Government.
Merrill Lynch Variable Series Funds, Inc.
Box 9011
Princeton, NJ
08543-9011
#16897-12/94
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MERRILL LYNCH VARIABLE SERIES FUNDS, INC.
ANNUAL REPORT--DECEMBER 31, 1994
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DEAR SHAREHOLDER:
We are pleased to submit this annual report for Merrill Lynch Variable Series
Fund, Inc., in which we summarize the investment performance of each of the
Fund's portfolios and outline our view of the investment environment.
Performance information for each portfolio in Merrill Lynch Variable Series
Fund, Inc., excluding the Domestic Money Market Fund and Reserve Assets Fund,
can be found in the tables on pages 9-22 of this report to shareholders.
THE ENVIRONMENT
Volatility in the US financial markets continued during the six months ended
December 31, 1994, largely prompted by concerns of increasing inflationary
pressures. The possibility of continued monetary policy tightening by the
Federal Reserve Board was predominant in the minds of investors throughout most
of the period. Therefore, there was little surprise in mid-
November when the central bank announced the sixth increase in short-term
interest rates in 1994. Early in the period, the weakness of the US dollar in
foreign exchange markets prompted declines in US stock and bond prices, but some
strengthening of the US currency has occurred recently.
The manufacturing sector was the driving force behind the US economy through
the final quarter of the year, making an important contribution to the
substantial increase in corporate earnings. US companies have been successful at
containing labor costs, which are an important component of the inflation
outlook. Although consumer spending grew at a slower pace than in previous
economic recoveries, purchases of vehicles and household durable goods rose in
the latter months of 1994. Despite the relatively modest rise in consumer
spending, the personal savings rate fell to an all-time annual low in 1994.
In the weeks ahead, investors will continue to assess economic data and
inflationary trends in order to gauge whether further increases in short-term
interest rates are likely. The core inflation rate rose less than 3% in 1994
following a 3% increase in 1993, the best sustained inflation performance in 30
years. It is not likely that such positive inflation results will be duplicated
in 1995. In addition, investor interest in the new year will also be focused on
the progress that the new Congress makes on both reducing spending and the
Federal budget deficit and passing tax cuts that promote savings and investment.
Legislative progress, combined with continued indications of moderate and
sustainable levels of economic growth, would be positive for the US capital
markets. However, the lagged effects of higher interest rates could slow the
economy sharply and with it, the growth of corporate profits.
AMERICAN BALANCED FUND
The poor performance of the US bond sector for much of 1994 was the primary
contributor to the portfolio's total return of 4.2% for the year. (Results do
not reflect sales charges, and would be lower if sales charges were included.)
During the last two months of 1994, bonds recovered a small portion of the
losses suffered earlier in the year. Consequently, the policy of enlarging the
bond allocation began to make a positive contribution to performance late in the
year. Overall, the equity sector fared better than fixed-income securities
during 1994. However, exceptionally strong returns were limited to a few
industry sectors, such as technology and healthcare.
As of December 31, 1994, the portfolio's asset allocation was: stocks (40%),
bonds (54%), and cash (6%). During the second half of 1994, we continued to
expand bond holdings and reduce equity investments. The shift reflected the
increased relative appeal of bonds, with intermediate-term US interest rates
approaching the 8% level. We are increasingly confident that the peak in
intermediate-term US interest rates has passed. The raising of short-term
interest rates by the Federal Reserve Board, which began in February 1994,
should produce a slower US economy during 1995, reducing fears of a resurgence
of inflation.
We remain cautious over the outlook for US equities pending evidence that the
Federal Reserve Board has completed its tightening of monetary policy. The
reduction of US equity holdings was achieved through the acceptance of profits
in Aluminum Co. of America and Teradyne, Inc. In the healthcare sector, we
replaced Bristol-Myers Squibb Co. with Abbott Laboratories. Currently, consumer
staples and capital spending are the largest sectors in the portfolio. We
continue to underweight the consumer durables sector since this sector could be
the most vulnerable to a slowdown in the US economy.
BASIC VALUE FOCUS FUND
For the year ended December 31, 1994, net assets in Basic Value Focus Fund
increased to $164 million, up from $2 million at inception on July 1, 1993 and
$47 million on December 31, 1993.
For the six-month period, Basic Value Focus Fund provided a total return of
+5.99% as compared to +4.87% for the S&P 500. For the year ended December 31,
1994, our total return was +2.36% versus +1.30% for the S&P 500. Much of our
outperformance was a result of our overweighted position in cyclical stocks
earlier in the year and our higher-than-normal cash positions during the spring
stock market correction. In keeping with the Fund's contrarian investment
philosophy, we used weakness in the year to establish positions in the
out-of-favor retail, textile and apparel, and financial sectors. Key positions
initiated included The Limited, Inc., a leading retailer; Burlington Industries,
Inc. and Fruit of the Loom, major textile and apparel concerns; TIG Holdings
Inc., an insurance company; Brooklyn Bancorp Inc., River Bank America and
Bankers Trust Inc., New York banks; and Student Loan Marketing Association, a
major financial intermediary. All of these issues had come under pressure this
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year, and at our entry points offered attractive value characteristics.
Looking forward, the pace of economic activity and its effects on both
interest rates and the US dollar will continue to impact US stock prices. We
view the US dollar as an area of potential strength and expect it to do well
against most currencies in 1995. If this occurs, demand for US
dollar-denominated assets could increase throughout the world and could indicate
a healthy US stock market in 1995. We view the direction of the dollar as a key
to future stock performance. There is mounting pessimism among investment
professionals regarding the outlook for the US equity market. Frequently, times
of such negative forecasting provide attractive buying opportunities. We will
continue to seek individual opportunities for investments as they arise.
DEVELOPING CAPITAL MARKETS FOCUS FUND
At the start of the investment period (May 2, 1994), we held the view that
Asian markets were expensive and that Latin American markets were becoming fully
valued. We liked Mediterranean European markets where interest rates were
declining and earnings growth was starting to recover. Because we were less than
optimistic about the largest markets in our investment universe, we invested the
Fund's assets very slowly. As a result, at the end of December, the Fund still
had a 26.8% cash position. Relative to the sizes of their markets, the Fund was
neutrally weighted in Latin America, substantially overweighted in Mediterranean
Europe, and underweighted in Asia.
Since inception, the Fund's total return has been 4.9%. Beneficial to our
performance were the Fund's high cash position, its underweighting in Asia, and
its overweighting in Europe. Its investments in Latin America, particularly
Mexico, had a detrimental impact on performance.
Our research travels in Asia have confirmed our view that, in general, stock
prices reflect unrealistic growth expectations. We are seeing some value in the
Asian markets, but we are expecting further earnings downgrades and declines in
capital values which may take some more time to correct earlier excesses. We are
reassessing our investments in Latin America in light of the sharp devaluations
of the Mexican peso during recent weeks and the stock market corrections that
have ensued throughout the region. The near-term outlook for most countries in
the region is good and therefore we consider the selling to be indiscriminate
and overdone. As a result, we are taking this opportunity to accumulate
investments in blue-chip companies in markets outside of Mexico. We remain
positive on emerging markets in Europe because of attractive valuations and the
potential for further earnings recovery. For the Middle East/Africa, we like the
less-discovered nature of this area. However, we are deterred by high valuations
coupled with increasing inflationary prospects which are resulting in higher
interest rates in two of the larger Middle East/African markets, South Africa
and Israel.
As we look to the coming year, we remind our shareholders that the transition
of developing countries to 'first world' status takes place over many years.
Investment in these countries' stock markets should likewise have horizons of
several years. During a country's development, it will experience economic,
political and market trauma such as we are seeing in Mexico. However, these
events do not necessarily reverse the country's past achievements nor halt its
progress. It is during these periods that we find the most attractive
opportunities to invest.
DOMESTIC MONEY MARKET FUND
For the year ended December 31, 1994, Domestic Money Market Fund's net
annualized yield was 3.94%*. The Fund's 7-day yield as of December 31, 1994 was
5.17% (excluding gains and losses) and 5.17% (including gains and losses).
During the second half of 1994, short-term interest rates rose by over 150
basis points (1.50%), with most of the increase occurring in the last quarter.
Economic growth coupled with inflationary concerns prompted the Federal Reserve
Board to execute a much anticipated tightening of monetary policy in mid-August
and mid-November. Throughout this period, the Fund's investment strategy was
based on the belief that the Federal Reserve Board would remain committed to
tighter monetary policy.
Looking ahead, we do not believe that the central bank has raised interest
rates sufficiently to slow the economy's growth to its noninflationary
potential. Accordingly, we expect to remain cautious in the months ahead.
However, we do expect to identify buying opportunities when the market gets too
far ahead of the Federal Reserve Board.
EQUITY GROWTH FUND
Small cap stocks suffered sharp declines in 1994 as higher interest rates
hurt the smallest companies the most. Investors believed that a higher interest
rate environment would bring difficult operating conditions to this sector of
the market. Liquidity in the sector dried up, trading spreads widened and many
professionals belatedly increased cash positions late in the year, liquidating
smaller capitalized stocks.
The smaller the capitalization, the worse the damage. The smallest group of
companies in the S&P 500 (capitalizations from $122 million to $1.3 billion)
provided negative performance of 9.56% in 1994, which was 359 basis points worse
than the second-worst
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* Based on a constant investment throughout the period, with dividends
compounded daily, and reflecting a net return to the investor after expenses.
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sector ($1.3 billion to $2.7 billion) and over 1,140 basis points worse than the
largest 100 companies in the S&P 500 ($8.4 billion to $87 billion). This largest
sector was the only one which provided a positive return in 1994 at +1.85%. The
1994 calendar year was the first year since 1990 in which small stocks
underperformed the broader market.
Equity Growth Fund was caught in the thick of this collapse. The median
market capitalization of the portfolio at the beginning of 1994 was $125
million. This figure grew to just above $350 million at the end of December, a
reflection of our strategy of retaining smaller companies in the portfolio while
adding larger capitalized (close to $1 billion) companies. Management chose not
to conduct a mass liquidation of smaller holdings as some mutual funds did,
feeling that such a change would violate the spirit of the portfolio's
prospectus, and would also raise the portfolio's turn-
over rate to possibly unacceptable levels. Rather, as a defensive strategy, we
made new investments in issues with capitalizations closer to $1 billion. In
retrospect, Fund performance in 1994 was adversely affected by the decision to
maintain numerous positions in smaller-capitalized stocks.
We also increased the number of holdings, and cash reserves were allowed to
accumulate from time to time throughout the year. Another 1994 strategy was to
avoid significant overweightings in certain industries. As an example,
technology was about 20% of the portfolio through the year. Had it been 50% of
the portfolio or more, performance would have been significantly higher as this
group outperformed many others. Any overweighting of this nature would have left
the portfolio undiversified. In following the investment assignment of the
prospectus, cash was never greater than 20%, although it reached that level
several times, as part of a defensive strategy. Additional strategies undertaken
by the Fund during 1994 were to maintain significant (approximately 15%20%)
investments in the healthcare and capital spending sectors of the economy during
the year. Investments were generally made in companies with above-average
balance sheets and demonstrated earnings growth, selling below indicated
earnings growth rates. The portfolio also participated in a number of successful
initial public offerings during 1994. In general, these strategies affected
performance in a positive manner, reducing volatility and the overall risk
level.
FLEXIBLE STRATEGY FUND
During the fourth quarter of 1994, the widely anticipated US economic
slowdown played off against speculation that the change in Congress would
produce a more attractive stock and bond investment environment. At year-end,
economic growth persisted at a rate deemed unsustainable without producing
inflation. This led to a belief that the Federal Funds rate would be increased
despite problems associated with the Orange County, California bankruptcy and
the Mexican peso devaluation/float. This combination of events produced more
uncertainty than conviction, moving investors to the sidelines at the end of a
year which did not produce positive returns for most stock and bond investors.
Rising interest rates for most of 1994 made bonds progressively more
attractive relative to stocks which, when measured by the popular indexes, held
up under competitive pressure. Although we correctly resisted the temptation to
shift the asset mix in favor of bonds most of the year, in the fourth quarter we
did commit funds to bonds with the expectation of superior short-term returns.
Throughout the year we reduced the commitment to emerging market equity
investments which had performed well in 1993. These holdings produced negative
returns for 1994, completely offsetting many successful US equity positions,
most notably the telecommunications equipment and computer services companies.
Cash equivalents, which are now producing returns approximating 6%, are at an
abnormally high level of 18% while we await a resolution to the apparent
undervaluation of bonds relative to inflation. Should the 104th Congress cut the
capital gains tax rate or otherwise move to improve the investment environment,
we are likely to redeploy the Portfolio's assets currently assigned to cash
equivalents.
GLOBAL STRATEGY FOCUS FUND
In contrast to 1993, most emerging markets of Asia and Latin America
performed poorly in 1994. The weakness in these markets and the negative total
returns for the US bond market were major contributors to the portfolio's total
return of 1.5% for the year. (Results do not reflect deduction of sales charges,
and would be lower if sales charges were included.) The major positive influence
on the performance of the portfolio during 1994 was Japanese equities. This
sector was enlarged early in 1994 and represented the largest single commitment
for much of the year. A number of European equity markets also contributed
positive returns in US dollar terms, while US equities were relatively neutral
in terms of their contribution to overall portfolio performance.
As of December 31, 1994, the portfolio's asset allocation was: US stocks
(14%), foreign stocks (46%), US bonds (25%), foreign bonds (11%), and cash (4%).
We continued to enlarge the US bond weighting in the portfolio during the second
half of 1994. This expansion reflected our increasing confidence that the high
point for intermediate-term US interest rates has been seen. This expectation
reflects our belief that the US economy will slow down during 1995, reducing
fears of an acceleration of inflation.
In the equity sector, we took advantage of weakness in the Asian markets to
enlarge our commitments. New positions included Hong Leong Industries and UMW
Holdings in Malaysia, P.T. Indonesian
Satellite in Indonesia, MDX Company Ltd. in
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Thailand, and Shanghai Petrochemical Co. as an attractive representative in
China (traded on the Hong Kong stock exchange). We expect the Asian markets to
rebound during 1995 as investors realize that economic prospects remain
exceptionally attractive. We also remain overweighted in the Latin American
markets. These markets were hard hit in late 1994 and early 1995 as a result of
the devaluation of the Mexican peso. However, as is the case with the Asian
markets, substantial recoveries in the Latin American markets are expected
during 1995. We remain underweighted in the US stock market pending evidence
that the Federal Reserve Board has completed its tightening of monetary policy.
Our representation in European and Japanese equities is relatively neutral.
GLOBAL UTILITY FOCUS FUND
Overall, 1994 was not a good year for utility investors. A strong US economy
coupled with rising interest rates made 1994 a very difficult year for domestic
utility stocks and investors. Rising interest rates abroad, volatility in the
currency market and political uncertainties resulted in pressure on foreign
markets and thus foreign utility stocks since they are heavily weighted in most
indexes.
Our actions taken during the year focused on taking advantage of the turmoil
in the utility sector. We reduced our cash position from 35.9% at the end of
1993 to 5.9% as of December 31, 1994. The bulk of the reduction in cash came in
the second half of the year as we tried to take advantage of the weakness in the
domestic electric utility stocks which declined in price by 22.5%. In fact, as a
percentage of net assets, domestic electric utilities went from 18.9% as of June
30, 1994 to 25.2% as of December 31, 1994. During the past year, we also
increased our holdings in domestic telephone stocks from 12.4% to 17.7%. This
was accomplished primarily by adding to our existing positions. However, later
in the year we eliminated our positions in the long distance market which
accounted for 2.9% of net assets as of the end of 1993. The Fund's foreign
equity holdings as a percentage of net assets increased by 7.9% from 31.0% to
38.9%. There was a similar increase in our domestic equity holdings which now
account for 53.8% of net assets.
In summary, our strategy of putting the Fund's significant cash position to
work during the year benefited the Fund's performance. In particular, our
increased weighting in domestic utilities in the second half of 1994 added yield
to the Fund and enhanced its total rate of return. Looking ahead, we intend to
maintain our current strategy of looking for companies that either offer high
dividends up front but with limited growth prospects, companies that offer
average yields but with prospects for earnings and dividend growth, and
companies that offer the potential for faster capital appreciation given their
strong fundamental growth prospects. In our view, selectivity will be just as
important in 1995 as it was in 1994 as many of the industry issues that surfaced
during the year are still in force. The major differentiating factor, however,
is that valuations today are lower than they were at the end of 1993 and
therefore may present a better opportunity for the sector in the current year.
HIGH CURRENT INCOME FUND
The year 1994 was difficult for most investors as interest rates soared in
the face of stronger-than-expected economic growth and heightened inflationary
expectations. Common stock and bond indexes generally posted negative returns,
with fixed-income returns being the worst in any calendar year since the 1920s.
Corporate profits in many industries and companies exceeded expectations and
provided some countervailing positives for certain asset categories. The
high-yield market was helped by the surge in profits which positively impacted
such cyclical industries as steel, chemicals and paper. The total return on the
unmanaged Merrill Lynch High Yield Master Index was 1.17%, compared with 8.97%
on ten-year US Treasury notes.
During 1994, the portfolio's performance was negatively impacted by the
following factors: overweighting of defensive credits rather than cyclicals;
approximately 15% exposure to zero coupon securities; and, exposure to credits
with temporarily depressed sales and earnings. In the past year, investors had
no tolerance for longer duration bonds (especially zero coupon bonds) and no
patience for poor results. They rewarded strong earnings (for example, cyclical
companies) and short maturities with large cash-paying coupons.
While we believe it is likely that the Federal Reserve Board will achieve its
objective of slowing the economy to a noninflationary growth rate during the
first half of 1995, a recession will probably be avoided. Certainly, the
interest rate environment is likely to be more benign in 1995. In this scenario,
high-yield bonds should perform relatively well. The credit outlook remains
generally positive. We believe that corporate profits could increase in 1995,
particularly in certain cyclical industries like paper that only began the
recovery cycle in 1994.
Initial public offerings of equity should also continue to provide credit
support. In the first quarter of 1995, three high-yield issuers, Fort Howard
Corp., Uniroyal Chemical and American Standard Inc., have equity offerings
planned. We believe that defaults and credit problems will rise in 1995 but be
moderate by historic standards. Yield spreads and premiums of high-yield bonds
compared with US Treasury notes of similar maturity are narrower than the
longer-term averages. However, the long-term averages are biased by the late
1980s and early 1990s when the supply and quality of high-yield debt was
impacted by leveraged buy-out activity. The yield premiums are attractive
compared to the first half of the decade, and we think that period more nearly
resembles 1995.
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INTERMEDIATE GOVERNMENT BOND FUND
The bond market had one of its worst years ever in 1994. The decision of the
Federal Reserve Board in February 1994 to initiate a series of tightening moves
created a sense of anxiety among investors that inflationary pressures would
soon build up. During the course of the year, while interest rates jumped, the
overall Treasury yield curve flattened sharply as the yield spread between
2-year notes and 30-year bonds fell from 220 basis points at the beginning of
the year to only 20 basis points at year-end. However, about 100 basis points of
the curve flattening occurred in the last month and a half of 1994, when the
Federal Reserve Board's final tightening action, 75 basis points on November 15,
suggested to investors that the central bank was being vigilant and that
inflation in 1995 would be modest. This helped the long end of the curve at the
same time that it accelerated the overall flattening process. Yields in the
intermediate area were particularly hurt. At one point in December, the 5-year
note's yield exceeded that of the 30-year bond.
We reduced the average portfolio maturity from 5.36 years to 4.46 years by
year-end. We did this by selling securities with maturities of seven yearsten
years and by purchasing shorter-term issues and building the portfolio's cash
equivalent position. While this protected the portfolio from the more extensive
price drops of the longer maturities and helped to preserve capital to some
degree, we were still invested in a part of the yield curve which was hurt by
the market's fall, resulting in a slightly positive total return for the fiscal
year.
INTERNATIONAL BOND FUND
When the Federal Reserve Board began raising interest rates in February 1994,
it marked the end of the bull market for bonds. Although the economic recoveries
in Europe and Japan were lagging those of the United States and other
dollar-bloc economies, all global bond markets suffered. Throughout 1994, global
bond markets sold off in the face of surprisingly pervasive global growth and
the disappointing policy response from central bankers and politicians from the
Group of Seven industrialized nations.
The good news for the International Bond Fund in 1994 was that its inception
was early May 1994, after ten-year US bond yields had already risen 175 basis
points (1.75%) from late 1993 lows, and German and Japanese yields had risen 120
and 100 basis points, respectively. The bad news was that interest rates rose
another 100 basis points in the United States and Germany, and another 70 basis
points in Japan, before peaking for the year in the fourth quarter.
Since inception, the Fund was conservatively invested, with a bias toward
middle maturity (four-yearseven-year) European bonds. An average of 25% of the
Fund was in cash for most of the year, which was an appropriate strategy in a
bear market environment. Although the dollar fell against all major currencies
in 1994, and cash is dollar-denominated, the bond strategy more than offset the
dollar's negative impact, and the Fund outperformed the unmanaged JP Morgan
International Bond Index (which is 100% invested in foreign currency).
INTERNATIONAL EQUITY FOCUS FUND
Strong economic growth continues to constrain the performance of
international bond and equity markets. For the year ended December 31, 1994,
total return for the unmanaged Financial Times-- Actuaries World (Ex-US) Index
was +8.4%, in US dollar terms. The decline in world stock markets was associated
with a rise in ten-year US Treasury security yields from around 7.3% to 7.8%.
Total return for the International Equity Focus Fund for the year ended
December 31, 1994 was +0.6%. The Fund's underperformance relative to the
benchmark reflected an overweighted stance in some underperforming emerging
markets as well as poor performance by some of our Japanese stocks.
During the year ended December 31, 1994, our strategy was to underweight
European equity markets in favor of cash and emerging markets. We maintained a
high exposure in Japan relative to most international funds. The Fund's
performance in 1994 reflected generally disappointing returns from most equity
markets. Overall, the Fund's regional asset mix proved neutral, with the
positive impact from an overweight cash position balanced by the Fund's
long-term strategic exposure in emerging markets. Stock selection in Europe
added value over the year; however, the Fund's stock selection in Japan
underperformed and overall stock selection detracted from performance.
Significant changes in portfolio construction reflected a build-up in cash
exposure as markets firmed in July and August. We reduced the cash position
aggressively in September and October as markets weakened. We reduced the Fund's
exposure to the United Kingdom and Continental Europe over the period, while
increasing the exposure to underperforming markets, particularly Japan and the
Pacific Basin.
The major investment category remains Pacific Basin equities, which currently
represent 44.5% of Fund net assets. Cash resources have been applied to the
Japanese market progressively in the last six months during the market's
weakness. Other asset shifts during the six months ended December 31, 1994
included purchasing UK and New Zealand bonds; increasing exposure to
commodity-related equities in Canada; and investing in Hong Kong, Japan and
Germany during periods of market weakness.
Aside from the Japanese position, as of December 31, 1994, the Fund had 30.4%
of its net assets in Europe, 9.6% in the United Kingdom, 13.5% in the developed
Pacific Basin (ex-Japan) and 6.0% in Latin
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America. Other equity investments included positions in Canada, South Africa and
emerging Europe and Asia.
As growth strengthens ahead of consensus expectations and monetary policies
continue to tighten worldwide, the environment for equity markets is likely to
remain mixed. In part, the poor performance of markets since the end of October
has reflected increased pessimism about interest rates. Against a background of
rising economic growth and interest rate expectations, we favor
commodity-producing economies and those regions where capacity pressures are
least likely to cause central banks to raise interest rates.
As a result, we still favor a relatively high exposure to Japanese equities,
as the domestic recovery remains on track and inflationary pressures are
unlikely to become evident. Additionally, among the larger equity markets,
Japanese corporate profits are highly sensitive to economic growth. As the
domestic Japanese economic recovery gathers strength, we expect an improvement
in investor sentiment.
The investment cycle continues to strike a balance between accelerating
global growth and the increasing likelihood of a more rapid monetary policy
tightening. Provided the long-term prospect for subdued inflation remains
intact, we believe that an internationally diversified portfolio offers
potential for capital gains through the current business expansion. We will
continue to emphasize laggard equity markets and generally prefer cyclical
growth-oriented stocks. We believe that the Fund offers geographic
diversification for a US-based equity investor with the added potential of
attractive long-term returns.
NATURAL RESOURCES FOCUS FUND
The 12-month period ended December 31, 1994 was turbulent for the natural
resource sector. Commodity prices in the industrial sectors such as base metals,
chemicals, steels and paper products continued their strong upward trend during
the period. Share prices of natural resource-related companies responded
positively to this underlying scenario and outperformed the world's stock
markets in general until November. In November, evidence of continued strong
economic growth, low unemployment and high capacity utilization rates in the
United States prompted the Federal Reserve Board to raise short-term interest
rates by a greater-than-expected 75 basis points in an effort to contain
inflationary pressures. This, in turn, unsettled bond markets worldwide, and
left most of the world's stock markets with sharp losses during the month. Many
economically sensitive resource stocks bore the brunt of these losses as
investors feared that higher interest rates would significantly slow economic
growth and sharply reduce the demand for many basic resources. Chemical, metal,
paper and natural gas-related stocks were sold aggressively worldwide. We
believe the outlook for worldwide economic growth and basic resource demand
remains favorable, and therefore are using recent share price weakness in the
natural resource sector as an opportunity to further reduce the portfolio's cash
position which had risen to about 17% of net assets as of the end of December.
We continued to add to our exposure in the base metals sector. This sector is
one of the prime beneficiaries of the trend toward more synchronized worldwide
economic growth. Industrial production growth worldwide is rising and demand for
base metals is on a strong upward path. We also increased our exposure to the
energy sector through the purchase of a package of natural gas-oriented
exploration and production companies in the United States during a period of
price weakness. Natural gas prices fell sharply over the period as relatively
mild weather, incremental production from the Gulf of Mexico and an increased
level of imports from Canada created an excess supply. In response, several
major producers have temporarily curtailed production to help correct this
imbalance. This trend, along with expectations of stronger demand as we move
into the winter heating season, should allow gas prices to improve. In addition,
we maintained a significant weighting in the paper and forest products sector.
The pricing tone in this industry has improved dramatically since the beginning
of 1994. Many price increases are just beginning to take effect and therefore
should have an increasingly positive impact on company earnings. The portfolio's
holdings of diversified paper companies should be prime beneficiaries of this
improving industry outlook.
Our decision to emphasize the industrial side of our universe generally
enhanced performance during the fiscal year in review. These economically
sensitive sectors were prime beneficiaries of the trend toward stronger
worldwide economic growth and generally outperformed the broad stock market
averages during the period. Looking ahead, we remain optimistic about the
outlook for investing in the natural resource sector. The long-awaited
synchronized growth of the key economic blocs is now beginning to emerge. This
has positive implications for the underlying demand for basic resources and also
for the outlooks of natural resource companies.
PRIME BOND FUND
During the 12-month period ended December 31,
1994, the total return for your Fund was 4.8%. This compares to a total return
of 3.3% for the unmanaged Merrill Lynch C0A0 Index, comprised of industrial
bonds rated A or better. These returns occurred in an environment where the
Federal Reserve Board continued to aggressively tighten monetary policy, causing
the yield curve to flatten sharply as yields on shorter-term maturities rose and
their prices declined. As a result, longer-term bonds outperformed shorter-term
issues during the period as investors in long-term issues became more
comfortable with the Federal Reserve Board's vigilance against the threat of
inflation. The Fund retains a very high quality bias,
6
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
with an average rating of AA, as compared to the
Merrill Lynch C0A0 Index's average of A+.
During the year ended December 31, 1994, we ventured toward a more balanced
approach to the Fund's allocation along the yield curve. The Fund had been
heavily weighted in the intermediate sector of the curve (seven yearsten years).
With the increase in interest rates during the year, the continued Federal
Reserve Board tightening and repeatedly low reported levels of inflation, we
believed that value returned in the long-term sector of the yield curve. As the
yield curve flattened, we moved to a more 'barbelled' position, out of the
intermediate area into both shorter and longer maturities. In addition, we
reduced the average duration of the Fund to 4.72 years. This investment strategy
protected the Fund from the most vulnerable area of the yield curve, which was
the intermediate sector. The barbelling program positioned the Fund more
conservatively.
Corporate sector allocation also reflected the flatter yield curve
environment as we became more conservative in our holdings of financial
institutions. We emphasized more stable consumer finance companies over
brokerage firms and banks. The pinch on earnings from the flatter yield curve
will be felt in the next few quarters, stopping any debt ratings upgrade
momentum seen in the banking sector in 1994. We also began to add to the
electric utility sector, an area that had previously been hurt by its changed
competitive environment.
QUALITY EQUITY FUND
During the fourth quarter of 1994, the widely anticipated US economic
slowdown played off against speculation that the change in Congress would
produce a more attractive stock and bond investment environment. At year-end,
economic growth persisted at a rate deemed unsustainable without producing
inflation. This led to a belief that the Federal Funds rate would be increased
despite problems associated with the Orange County, California bankruptcy and
the Mexican peso devaluation/float. This combination of events produced more
uncertainty than conviction, moving investors to the sidelines at the end of a
year which did not produce positive returns for most stock and bond investors.
As 1994 progressed, we began to shift from economy sensitive equity groups
(including the auto, rail and consumer durables sectors) in favor of more stable
groups (including consumer nondurables and energy stocks) which have
historically outperformed when economic growth has decelerated. Growth stocks,
cyclical stocks and defensive stocks performed a 'trampoline act' out of sync
for much of the year, making any logical strategy nearly useless, resulting in a
disappointing return for 1994. Nonetheless, we hold to the view that the US
economy will decelerate in 1995 while other developed economies are still trying
to recover from their comparatively weak conditions.
Cash equivalents, which are now producing returns approximating 6%, are at
abnormally high levels of 19.3% of net assets while we seek equities offering
good value. Should the 104th Congress cut the capital gains tax rate or
otherwise move to improve the investment environment, we are likely to redeploy
the Portfolio's assets currently assigned to cash equivalents.
RESERVE ASSETS FUND
For the year ended December 31, 1994, Reserve Assets Fund's net annualized
yield was 3.80%*. The Fund's 7-day yield as of December 31, 1994 was 5.00%
(excluding gains and losses) and 5.00% (including gains and losses).
Short-term interest rates rose over 150 basis points (1.50%) during the last
six months of 1994. Persistent economic strength, as well as a high level of
resource utilization, prompted the Federal Reserve Board to execute a much
anticipated tightening of monetary policy in mid-August and mid-November. The
Fund maintained a defensive strategy throughout most of this period.
For the past six months, the primary focus of the Fund has been in the very
front end of the yield curve, with an emphasis on money market securities in the
30-day, 60-day, and 90-day areas. During this time, we endeavored to shorten the
Fund's average life while building a cash position before each expected
tightening, which enabled us to take advantage of the higher interest-rate
environment. As a further hedge against rising interest rates, we added to our
positions in variable rate demand products.
It is our opinion that in the near future the Federal Reserve Board will deem
it necessary to further tighten monetary policy. While we will continue to
remain cautious, we do expect to identify buying opportunities when the market
gets too far ahead of the Federal Reserve Board.
WORLD INCOME FOCUS FUND
The year 1994 was one of the most difficult in history for global
fixed-income markets. The tumultuous combination of unexpected synchronized
global growth, heightened inflationary fears, successive interest rate hikes by
the Federal Reserve Board, and massive selling by hedge funds caused global bond
prices to plummet.
The Fund's performance suffered as a result of our high average maturity in a
rising interest rate environment plus our overweight holdings in Canada and
Australia, which dramatically underperformed the
- ------------
* Based on a constant investment throughout the period, with dividends
compounded daily, and reflecting a net return to the investor after all
expenses.
7
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
United States, while within Europe, only the German and Belgian markets
outperformed the US market. In addition, the Fund's 4% exposure to emerging
markets negatively impacted overall performance. The major positive for the Fund
was the maintenance of an overweight exposure to the US high-yield sector, which
outperformed all of the international market in which your Fund normally
invests.
In looking ahead to 1995, the keys for the global bond markets will primarily
be the extent of an expected slowing in the second half of the year, mainly in
the United States, and the magnitude of the upswing in global inflation. We will
continue to monitor the Fund's emerging markets investments carefully in light
of our relatively more positive outlooks for the major Asian, Latin American and
central European nations. Within the high-yield market, there are many sectors
that are out-of-favor and offer bonds at large discounts to par value. This
environment could provide investment opportunities as well as challenges as 1995
unfolds.
IN CONCLUSION
We appreciate your investment in Merrill Lynch Variable Series Funds, Inc.,
and we look forward to sharing our investment outlook and objectives with you in
our June semi-annual report to shareholders.
Sincerely,
Arthur Zeikel
President
February 16, 1995
8
<PAGE>
<PAGE>
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MERRILL LYNCH VARIABLE SERIES FUNDS, INC.
DECEMBER 31, 1994
- --------------------------------------------------------------------------------
TOTAL RETURNS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
12 MONTH 6 MONTH
12/31/94 6/30/94 12/31/93 % CHANGE % CHANGE
<S> <C> <C> <C> <C> <C>
AMERICAN BALANCED FUND $13.08 $13.15 $14.08 -4.19%(1) +1.10%(2)
BASIC VALUE FOCUS FUND 11.10 10.54 10.95 +2.36(3) +5.99(4)
DEVELOPING CAPITAL MARKETS FOCUS FUND 9.51 9.71 10.00* -4.90* -2.06
EQUITY GROWTH FUND 19.26 18.39 20.96 -7.27(5) +4.73
FLEXIBLE STRATEGY FUND 14.70 14.55 16.19 -4.20(6) +2.03(7)
GLOBAL STRATEGY FOCUS FUND 11.73 12.05 12.17 -1.46(8) -1.59(9)
GLOBAL UTILITY FOCUS FUND 9.45 9.64 10.66 -8.51(10) -0.11(11)
HIGH CURRENT INCOME FUND 10.61 11.23 12.06 -3.59(12) -0.66(13)
INTERMEDIATE GOVERNMENT BOND FUND 9.97 10.03 10.00* +1.79(14)* +1.28(15)
INTERNATIONAL BOND FUND 9.70 9.81 10.00* +0.37(16)* +2.00(17)
INTERNATIONAL EQUITY FOCUS FUND 10.90 11.07 11.03 +0.55(18) -1.21(19)
NATURAL RESOURCES FOCUS FUND 10.82 10.68 10.82 +1.44(20) +2.19(21)
PRIME BOND FUND 11.12 11.45 12.64 -4.80(22) +0.54(23)
QUALITY EQUITY FUND 27.74 26.91 29.02 -1.20(24) +3.66(25)
WORLD INCOME FOCUS FUND 9.17 9.54 10.38 -4.21(26) +0.35(27)
</TABLE>
<TABLE>
<C> <S>
* Net asset values and total investment returns are from commencement of operations on May 2, 1994.
(1) Percent change includes reinvestment of $0.396 per share ordinary income dividends and $0.020 per share capital
gains distributions.
(2) Percent change includes reinvestment of $0.213 per share ordinary income dividends.
(3) Percent change includes reinvestment of $0.105 per share ordinary income dividends.
(4) Percent change includes reinvestment of $0.069 per share ordinary income dividends.
(5) Percent change includes reinvestment of $0.190 per share capital gains distributions.
(6) Percent change includes reinvestment of $0.445 per share ordinary income dividends and $0.387 per share capital
gains distributions.
(7) Percent change includes reinvestment of $0.143 per share ordinary income dividends.
(8) Percent change includes reinvestment of $0.256 per share ordinary income dividends and $0.011 per share capital
gains distributions.
(9) Percent change includes reinvestment of $0.131 per share ordinary income dividends.
(10) Percent change includes reinvestment of $0.311 per share ordinary income dividends.
(11) Percent change includes reinvestment of $0.182 per share ordinary income dividends.
(12) Percent change includes reinvestment of $1.033 per share ordinary income dividends.
(13) Percent change includes reinvestment of $0.549 per share ordinary income dividends.
(14) Percent change includes reinvestment of $0.207 per share ordinary income dividends.
(15) Percent change includes reinvestment of $0.187 per share ordinary income dividends.
(16) Percent change includes reinvestment of $0.335 per share ordinary income dividends.
(17) Percent change includes reinvestment of $0.304 per share ordinary income dividends.
(18) Percent change includes reinvestment of $0.191 per share ordinary income dividends.
(19) Percent change includes reinvestment of $0.037 per share ordinary income dividends.
(20) Percent change includes reinvestment of $0.155 per share ordinary income dividends.
(21) Percent change includes reinvestment of $0.093 per share ordinary income dividends.
(22) Percent change includes reinvestment of $0.888 per share ordinary income dividends and $0.041 per share capital
gains distributions.
(23) Percent change includes reinvestment of $0.391 per share ordinary income dividends.
(24) Percent change includes reinvestment of $0.573 per share ordinary income dividends and $0.354 per share capital
gains distributions.
(25) Percent change includes reinvestment of $0.149 per share ordinary income dividends.
(26) Percent change includes reinvestment of $0.784 per share ordinary income dividends.
(27) Percent change includes reinvestment of $0.404 per share ordinary income dividends.
</TABLE>
9
<PAGE>
<PAGE>
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MERRILL LYNCH VARIABLE SERIES FUNDS, INC.
DECEMBER 31, 1994
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR FIVE YEARS TEN YEARS SINCE
ENDED ENDED ENDED INCEPTION
12/31/94 12/31/94 12/31/94 TO 12/31/94
<S> <C> <C> <C> <C>
AMERICAN BALANCED FUND -4.19% +7.02% -- +8.64%+
BASIC VALUE FOCUS FUND +2.36% -- -- +7.90%++
DEVELOPING CAPITAL MARKETS FOCUS FUND -- -- -- -4.90%+++*
EQUITY GROWTH FUND -7.27% +7.36% +7.76% --
FLEXIBLE STRATEGY FUND -4.20% +8.66% -- +9.06%++++
GLOBAL STRATEGY FOCUS FUND -1.46% -- -- +7.37%+++++
GLOBAL UTILITY FOCUS FUND -8.51% -- -- -1.50%++
HIGH CURRENT INCOME FUND -3.59% +12.49% +12.12% --
INTERMEDIATE GOVERNMENT BOND FUND -- -- -- +1.79%+++*
INTERNATIONAL BOND FUND -- -- -- +0.37%+++*
INTERNATIONAL EQUITY FOCUS FUND +0.55% -- -- +7.14%++
NATURAL RESOURCES FOCUS FUND +1.44% +1.55% -- +3.10%+
PRIME BOND FUND -4.80% +7.37% +9.02% --
QUALITY EQUITY FUND -1.20% +8.78% +13.62% --
WORLD INCOME FOCUS FUND -4.21% -- -- +0.96%++
</TABLE>
<TABLE>
<C> <S>
+ The Fund commenced operations on 6/01/88.
++ The Fund commenced operations on 7/01/93.
+++ The Fund commenced operations on 5/02/94.
++++ Flexible Strategy Fund commenced operations on 5/01/86.
+++++ Global Strategy Focus Fund commenced operations on 2/28/92.
* Aggregate total return.
</TABLE>
10
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH VARIABLE SERIES FUNDS, INC.
DECEMBER 31, 1994
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT AVERAGE ANNUAL TOTAL RETURNS*
- --------------------------------------------------------------------------------
RETIREMENT PLUS VARIABLE ANNUITY
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR FIVE YEARS TEN YEARS SINCE
ENDED ENDED ENDED INCEPTION
12/31/94 12/31/94 12/31/94 TO 12/31/94
<S> <C> <C> <C> <C>
AMERICAN BALANCED FUND -11.48% +5.00% -- +6.97%+
BASIC VALUE FOCUS FUND -5.47% -- -- +2.41%++
DEVELOPING CAPITAL MARKETS FOCUS FUND -- -- -- -18.62%+++
EQUITY GROWTH FUND -14.30% +5.32% +6.17% --
FLEXIBLE STRATEGY FUND -11.49% +6.62% -- +7.48%++++
GLOBAL STRATEGY FOCUS FUND -8.97% -- -- +4.19%+++++
GLOBAL UTILITY FOCUS FUND -15.44% -- -- -6.45%++
HIGH CURRENT INCOME FUND -10.93% +10.46% +10.49% --
INTERMEDIATE GOVERNMENT BOND FUND -- -- -- -8.80%+++
INTERNATIONAL BOND FUND -- -- -- -10.95%+++
INTERNATIONAL EQUITY FOCUS FUND -7.13% -- -- +1.70%++
NATURAL RESOURCES FOCUS FUND -6.31% -0.45% -- +1.50%+
PRIME BOND FUND -12.03% +5.33% +7.44% --
QUALITY EQUITY FUND -8.74% +6.75% +11.97% --
WORLD INCOME FOCUS FUND -11.50% -- -- -4.13%++
</TABLE>
<TABLE>
<C> <S>
* Returns are calculated as if the contract were surrendered at the end of the periods shown and assume the
separate account had been in existence and a contract had been in force during the periods shown. They reflect
separate account charges deducted daily at an annual rate of 1.25% mortality and expense risk charge, and a 0.10%
administrative charge. In addition, a contingent deferred sales charge incrementally decreasing from 7% in the
first year a premium is invested in the contract to 0% the eighth year and later that the premium remains in the
contract, deducted on the last day of the period shown and a contract maintenance charge of $40 are reflected.
All charges and fees are described in the product prospectuses. See those prospectuses for more complete
information.
+ The Fund commenced operations on 6/01/88.
++ The Fund commenced operations on 7/01/93.
+++ The Fund commenced operations on 5/02/94.
++++ The Fund commenced operations on 4/30/86.
+++++ The Fund commenced operations on 2/28/92.
Investment results and principal value will fluctuate so that an investment may be worth more or less than its original
cost. Past performance illustrated should not be considered a representation of future performance.
</TABLE>
11
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH VARIABLE SERIES FUNDS, INC.
DECEMBER 31, 1994
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT AVERAGE ANNUAL TOTAL RETURNS*
- --------------------------------------------------------------------------------
PORTFOLIO PLUS VARIABLE ANNUITY
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR FIVE YEARS TEN YEARS SINCE
ENDED ENDED ENDED INCEPTION
12/31/94 12/31/94 12/31/94 TO 12/31/94
<S> <C> <C> <C> <C>
AMERICAN BALANCED FUND -9.67% +4.87% -- +6.72%+
EQUITY GROWTH FUND -12.57% +5.20% +6.24% --
FLEXIBLE STRATEGY FUND -9.68% +6.52% -- +7.60%++
HIGH CURRENT INCOME FUND -9.11% +10.34% +10.62% --
NATURAL RESOURCES FOCUS FUND -4.35% -0.71% -- +1.11%+++
PRIME BOND FUND -10.24% +5.22% +7.57% --
QUALITY EQUITY FUND -6.86% +6.64% +11.41% --
</TABLE>
<TABLE>
<C> <S>
* Returns are calculated as if the contract were surrendered at the end of the periods shown. They reflect separate
account charges deducted daily at an annual rate of 1.25% mortality and expense risk charge, and 0.05% distribution
expense charge. (Family Life Insurance Company contracts are assessed a 1.30% mortality and expense risk charge and
no distribution expense charge.) In addition, a contingent deferred sales charge of 5% for the first seven years the
premium remains in the contract, deducted on the last day of the period shown, and a contract administration charge
of $30 are reflected. All charges and fees are described in the product prospectuses. See those prospectuses for
more complete information.
Charges reflected are for non-qualified contracts. Qualified contracts have a lower expense risk charge. Average
annual total returns for those contract owners would, therefore, be higher than the returns shown above.
+ The Fund commenced operations on 6/01/88.
++ The Fund commenced operations on 4/30/86.
+++ The Fund commenced operations on 6/01/88.
</TABLE>
Investment results and principal value will fluctuate so that an investment may
be worth more or less than its original cost. Past performance illustrated
should not be considered a representation of future performance.
12
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH VARIABLE SERIES FUNDS, INC.
DECEMBER 31, 1994
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT AVERAGE ANNUALIZED RETURNS*
- --------------------------------------------------------------------------------
INVESTOR LIFE/INVESTOR LIFE PLUS VARIABLE LIFE INSURANCE POLICIES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FROM
5/2/94
TO 12/31/94
<S> <C>
BASIC VALUE FOCUS FUND -7.20%+
DEVELOPING CAPITAL MARKETS FOCUS FUND -23.65%++
GLOBAL UTILITY FOCUS FUND -19.60%+
INTERNATIONAL BOND FUND -13.89%++
INTERNATIONAL EQUITY FOCUS FUND -17.73%+
WORLD INCOME FOCUS FUND -14.81%+
</TABLE>
<TABLE>
<C> <S>
* Returns reflect a separate account mortality and expense risk charge at an annual rate of 0.90% and a deferred
contract load of 9%. They do not reflect quarterly cost of insurance. Returns would be lower if they reflected
the deduction for cost of insurance, which can vary by age, sex, and rating class of the insured, and by each
contract's net amount at risk. All charges and fees are described in the product prospectuses. See those
prospectuses for more complete information.
+ Funds commenced operations on 7/1/93.
++ Funds commenced operations on 5/2/94.
Investment results and principal value will fluctuate so that an investment may be worth more or less than its original
cost. Past performance illustrated should not be considered a representation of future performance.
</TABLE>
13
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH VARIABLE SERIES FUNDS, INC.
DECEMBER 31, 1994
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT AVERAGE ANNUALIZED RETURNS*
- --------------------------------------------------------------------------------
ESTATE INVESTOR I & II VARIABLE LIFE INSURANCE POLICIES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FROM
5/2/94
TO 12/31/94
<S> <C>
BASIC VALUE FOCUS +6.24%+
GLOBAL UTILITY FOCUS -6.76%+
INTERNATIONAL EQUITY FOCUS -4.80%+
WORLD INCOME FOCUS -1.73%+
DEVELOPING CAPITAL MARKETS FOCUS -11.01%++
INTERNATIONAL BOND -0.77%++
</TABLE>
<TABLE>
<C> <S>
* Returns reflect a separate account mortality and expense risk charge at an annual rate of 0.90%. RETURNS DO NOT
REFLECT DEDUCTIONS FOR CONTRACT LOADING. Returns do not reflect the quarterly cost of insurance. Returns would be
lower if they reflected the deductions for contract loading and for cost of insurance, which will vary by age,
sex, and rating class of the insured and by each contract's net amount at risk. All charges and fees are
described in the product prospectuses. See those prospectuses for more complete information.
+ Funds commenced operations on 7/1/93.
++ Funds commenced operations on 5/2/94.
Investment results and principal value will fluctuate so that an investment may be worth more or less than its original
cost. Past performance illustrated should not be considered a representation of future performance.
</TABLE>
14
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
AMERICAN BALANCED FUND
TOTAL RETURN BASED ON A $10,000 INVESTMENT
- --------------------------------------------------------------------------------
A line graph depicting the growth of an investment in the Fund compared to
growth of an investment in the S&P 500 Index and a Weighted Index.
Beginning and ending values are:
6/01/88** 12/94
--------- -------
American Balanced Fund*+ $10,000 $17,260
S&P 500 Index++ $10,000 $21,238
Weighted Index+++ $10,000 $17,719
<TABLE>
<C> <S>
* Assuming transaction costs and other operating expenses, including advisory fees. Does not include insurance-related
fees and expenses.
** Commencement of Operations.
+ American Balanced Fund invests in a balanced portfolio of fixed-income and equity securities.
++ This unmanaged broad-based Index is comprised of common stocks.
+++ This unmanaged Index, which is an equally weighted blend of the Three-Month Treasury Bill Index, the Merrill Lynch
B0A0 Index, and the S&P 500 Index, is comprised of US Treasury Bills maturing in up to 3 months, investment-grade
bonds, and common stocks.
Past performance is not predictive of future performance.
</TABLE>
- --------------------------------------------------------------------------------
BASIC VALUE FOCUS FUND
TOTAL RETURN BASED ON A $10,000 INVESTMENT
- --------------------------------------------------------------------------------
A line graph depicting the growth of an investment in the Fund compared to
growth of an investment in the S&P 500 Index.
Beginning and ending values are:
7/01/93** 12/94
--------- -------
Basic Value Focus Fund*+ $10,000 $11,209
S&P 500 Index++ $10,000 $10,668
<TABLE>
<C> <S>
* Assuming transaction costs and other operating expenses, including advisory fees. Does not include insurance-related
fees and expenses.
** Commencement of Operations.
+ Basic Value Focus Fund invests primarily in equities that Fund Management believes are undervalued.
++ This unmanaged broad-based Index is comprised of common stocks.
Past performance is not predictive of future performance.
</TABLE>
15
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
DEVELOPING CAPITAL MARKETS FOCUS FUND
TOTAL RETURN BASED ON A $10,000 INVESTMENT
- --------------------------------------------------------------------------------
A line graph depicting the growth of an investment in the Fund compared to
growth of an investment in the Morgan Stanley Capital International
EAFE Index. Beginning and ending values are:
5/02/94** 12/94
--------- -------
Developing Capital Markets
Focus Fund*+ $10,000 $9,510
Morgan Stanley Capital
International EAFE Index++ $10,000 $9,990
<TABLE>
<C> <S>
* Assuming transaction costs and other operating expenses, including advisory fees. Does not include insurance-related
fees and expenses.
** Commencement of Operations.
+ Developing Capital Markets Focus Fund invests in securities, principally equities, of issuers in countries having
smaller capital markets.
++ This unmanaged Index measures the total returns of developed foreign stock markets in Europe, Asia and the Far East,
calculated in US dollars.
Past performance is not predictive of future performance.
</TABLE>
- --------------------------------------------------------------------------------
EQUITY GROWTH FUND
TOTAL RETURN BASED ON A $10,000 INVESTMENT
- --------------------------------------------------------------------------------
A line graph depicting the growth of an investment in the Fund compared to
growth of an investment in the Russell 1000 Gowth Index.
Beginning and ending values are:
12/84 12/94
--------- -------
Equity Growth Fund*+ $10,000 $21,105
Russell 1000 Growth Index++ $10,000 $38,118
<TABLE>
<C> <S>
* Assuming transaction costs and other operating expenses, including advisory fees. Does not include insurance-related
fees and expenses.
+ Equity Growth Fund invests primarily in common stocks of small companies and emerging growth companies regardless of
size.
++ This unmanaged broad-based Index is comprised of a representative sampling of the common stocks of 1,000 of the
largest publicly traded companies domiciled in the United States.
Past performance is not predictive of future performance.
</TABLE>
16
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
FLEXIBLE STRATEGY FUND
TOTAL RETURN BASED ON A $10,000 INVESTMENT
- --------------------------------------------------------------------------------
A line graph depicting the growth of an investment in the Fund compared to
growth of an investment in the S&P 500 Index and a Weighted Index.
Beginning and ending values are:
5/01/86** 12/94
--------- -------
Flexible Strategy Fund*+ $10,000 $21,225
S&P 500 Index++ $10,000 $25,800
Weighted Index+++ $10,000 $22,525
<TABLE>
<C> <S>
* Assuming transaction costs and other operating expenses, including advisory fees. Does not include insurance-related
fees and expenses.
** Commencement of Operations.
+ Flexible Strategy Fund, through a flexible investment policy, invests in equity securities, intermediate-and
long-term debt obligations and money market securities of domestic and foreign issuers.
++ This unmanaged broad-based Index is comprised of common stocks.
+++ This unmanaged Index, which is an equally weighted blend of the S&P 500 Index and the Merrill Lynch B0A0 Index, is
comprised of common stocks as well as investment-grade bonds.
Past performance is not predictive of future performance.
</TABLE>
- --------------------------------------------------------------------------------
GLOBAL STRATEGY FOCUS FUND
TOTAL RETURN BASED ON A $10,000 INVESTMENT
- --------------------------------------------------------------------------------
A line graph depicting the growth of an investment in the Fund compared to
growth of an investment in the Morgan Stanley Capital International
World Index and a Weighted Index. Beginning and ending values are:
2/28/92** 12/94
--------- -------
Global Strategy Focus Fund*+ $10,000 $12,239
Morgan Stanley Capital
International World Index++ $10,000 $12,655
Weighted Index+++ $10,000 $12,543
<TABLE>
<C> <S>
* Assuming transaction costs and other operating expenses, including advisory fees. Does not include insurance-related
fees and expenses.
** Commencement of Operations.
+ Global Strategy Focus Fund invests primarily in a portfolio of equity and fixed-income securities of US and foreign
issuers.
++ This unmanaged market capitalization-weighted Index is comprised of a representative sampling of stocks of large-,
medium-, and small-capitalization companies in 22 countries, including the United States.
+++ This unmanaged Index, which is an equally weighted blend of the Morgan Stanley World Index, the Salomon Brothers
World Government Bond Index, and the Salomon Brothers World Money Market Index, is comprised of a representative
sampling of stocks of large-, medium-, and small-capitalization companies in 22 countries, government bonds and
money market securities in the major markets, including the United States.
Past performance is not predictive of future performance.
</TABLE>
17
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
GLOBAL UTILITY FOCUS FUND
TOTAL RETURN BASED ON A $10,000 INVESTMENT
- --------------------------------------------------------------------------------
A line graph depicting the growth of an investment in the Fund compared to
growth of an investment in the Financial Times-Actuaries World Index and the
Financial Times-Actuaries World Utility Index.
Beginning and ending values are:
7/01/93** 12/94
--------- -------
Global Utility Focus Fund*+ $10,000 $9,776
Financial Times-Actuaries
World Index++ $10,000 $11,232
Financial Times-Actuaries
World Utility Index+++ $10,000 $9,758
<TABLE>
<C> <S>
* Assuming transaction costs and other operating expenses, including advisory fees. Does not include insurance-related
fees and expenses.
** Commencement of Operations.
+ Global Utility Focus Fund invests at least 65% of total assets in equity and debt securities of domestic and foreign
firms involved in electricity, telecommunications, gas or water.
++ This unmanaged market capitalization-weighted Index is comprised of nearly 2,200 equities from 24 countries in 12
regions, including the United States.
+++ This unmanaged market capitalization-weighted Index is comprised of utility stocks from any of the 24 countries that
make up the Financial Times--Actuaries World Index.
Past performance is not predictive of future performance.
</TABLE>
- --------------------------------------------------------------------------------
HIGH CURRENT INCOME FUND
TOTAL RETURN BASED ON A $10,000 INVESTMENT
- --------------------------------------------------------------------------------
A line graph depicting the growth of an investment in the Fund compared to
growth of an investment in the First Boston High Yield Index.
Beginning and ending values are:
12/84 12/94
--------- -------
High Current Income Fund*+ $10,000 $31,381
First Boston High Yield Index++ $10,000 $32,460
<TABLE>
<C> <S>
* Assuming transaction costs and other operating expenses, including advisory fees. Does not include insurance-related
fees and expenses.
+ High Current Income Fund invests principally in fixed-income securities, which are rated in the lower rating
categories of the established rating services or in unrated securities of comparable quality.
++ This unmanaged market-weighted Index of high-yield debt securities is comprised of 423 securities rated BBB or
lower.
Past performance is not predictive of future performance.
</TABLE>
18
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
INTERMEDIATE GOVERNMENT FUND
TOTAL RETURN BASED ON A $10,000 INVESTMENT
- --------------------------------------------------------------------------------
A line graph depicting the growth of an investment in the Fund compared to
growth of an investment in the Merrill Lynch G402 Index.
Beginning and ending values are:
5/02/94** 12/94
--------- -------
Intermediate Government Fund*+ $10,000 $10,179
Merrill Lynch G402 Index++ $10,000 $10,007
<TABLE>
<C> <S>
* Assuming transaction costs and other operating expenses, including advisory fees. Does not include
insurance-related fees and expenses.
** Commencement of Operations.
+ Intermediate Government Bond Fund invests only in securities issued or guaranteed by the US Government and its
agencies with a maximum maturity not to exceed 15 years.
++ This unmanaged Index is comprised of intermediate-term US Government bond and US Treasury securities maturing in
7-10 years.
Past performance is not predictive of future performance.
</TABLE>
- --------------------------------------------------------------------------------
INTERNATIONAL BOND FUND
TOTAL RETURN BASED ON A $10,000 INVESTMENT
- --------------------------------------------------------------------------------
A line graph depicting the growth of an investment in the Fund compared to
growth of an investment in the JP Morgan Non-US Dollar Government
Bond Index. Beginning and ending values are:
5/02/94** 12/94
--------- -------
International Bond Fund*+ $10,000 $10,037
JP Morgan Non-US Dollar
Government Bond Index++ $10,000 $10,320
<TABLE>
<C> <S>
* Assuming transaction costs and other operating expenses, including advisory fees. Does not include
insurance-related fees and expenses.
** Commencement of Operations.
+ International Bond Fund invests in a non-US international portfolio of debt instruments denominated in various
currencies and multinational currency units.
++ This unmanaged Index is comprised of global government bonds of the economies of the Organization for Economic
Organization and Development, other than the United States.
Past performance is not predictive of future performance.
</TABLE>
19
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
INTERNATIONAL EQUITY FOCUS FUND
TOTAL RETURN BASED ON A $10,000 INVESTMENT
- --------------------------------------------------------------------------------
A line graph depicting the growth of an investment in the Fund compared to
growth of an investment in the Financial Times-Actuaries World Ex-US Index.
Beginning and ending values are:
7/01/93** 12/94
--------- -------
International Equity Focus Fund*+ $10,000 $11,091
Financial Times-Actuaries
World Ex-US Index++ $10,000 $11,613
<TABLE>
<C> <S>
* Assuming transaction costs and other operating expenses, including advisory fees. Does not include
insurance-related fees and expenses.
** Commencement of Operations.
+ International Equity Focus Fund invests in a portfolio of securities of foreign countries, both developed and
developing, throughout the world.
++ This unmanaged capitalization-weighted index is comprised of over 1,800 companies in 24 countries, excluding the
United States.
Past performance is not predictive of future performance.
</TABLE>
- --------------------------------------------------------------------------------
NATURAL RESOURCES FOCUS FUND
TOTAL RETURN BASED ON A $10,000 INVESTMENT
- --------------------------------------------------------------------------------
A line graph depicting the growth of an investment in the Fund compared to
growth of an investment in the S&P Industrials Index, the Consumer Price
Index and the Lipper Natural Resources Average.
Beginning and ending values are:
6/01/88** 12/94
--------- -------
Natural Resources Focus Fund*+ $10,000 $12,230
S&P Industrials Index++ $10,000 $21,741
Lipper Natural Resources Average+++ $10,000 $14,998
Consumer Price Index++++ $10,000 $12,689
<TABLE>
<C> <S>
* Assuming transaction costs and other operating expenses, including advisory fees. Does not include
insurance-related fees and expenses.
** Commencement of Operations.
+ Natural Resources Focus Fund invests primarily in a portfolio of equity securities of domestic and foreign
companies with substantial natural resource assets.
++ This unmanaged Index measures the pattern of movements of the common stocks of 400 large industrial companies and
their weighting by capitalization.
+++ This unmanaged Index is comprised of all US mutual funds clasified as natural resource-related funds.
++++ This unmanaged Index is the most widely used index of price changes over time and is designed to measure changes
in the typical market basket of purchases by urban consumers.
Past performance is not predictive of future performance.
</TABLE>
20
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
PRIME BOND FUND
TOTAL RETURN BASED ON A $10,000 INVESTMENT
- --------------------------------------------------------------------------------
A line graph depicting the growth of an investment in the Fund compared to
growth of an investment in the Merrill Lynch C0A0 Index.
Beginning and ending values are:
12/84 12/94
--------- -------
Prime Bond Fund*+ $10,000 $23,714
Merrill Lynch C0A0 Index++ $10,000 $27,999
<TABLE>
<C> <S>
* Assuming transaction costs and other operating expenses, including advisory fees. Does not include insurance
related fees and expenses.
+ Prime Bond Fund invests primarily in long-term corporate bonds rated A or better by either Standard & Poor's Corp.
or Moody's Investors Service, Inc.
++ This unmanaged broad-based Index is comprised of all industrialized bonds rated BBB3 or higher, of all maturities.
Past performance is not predictive of future performance.
</TABLE>
- --------------------------------------------------------------------------------
QUALITY EQUITY FUND
TOTAL RETURN BASED ON A $10,000 INVESTMENT
- --------------------------------------------------------------------------------
A line graph depicting the growth of an investment in the Fund compared to
growth of an investment in the S&P 500 Index.
Beginning and ending values are:
12/84 12/94
--------- -------
Quality Equity Fund*+ $10,000 $35,862
S&P 500 Index++ $10,000 $38,479
<TABLE>
<C> <S>
* Assuming transaction costs and other operating expenses, including advisory fees. Does not include
insurance-related fees and expenses.
+ Quality Equity Fund, which uses a fully managed investment policy, invests primarily in common stocks of
large-capitalization companies, as well as investment-grade debt and convertible securities.
++ This unmanaged broad-based Index is comprised of common stocks.
Past performance is not predictive of future performance.
</TABLE>
21
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
WORLD INCOME FOCUS FUND
TOTAL RETURN BASED ON A $10,000 INVESTMENT
- --------------------------------------------------------------------------------
A line graph depicting the growth of an investment in the Fund compared to
growth of an investment in the Merrill Lynch G5A0 Index and
a Weighted Index. Beginning and ending values are:
7/01/93** 12/94
--------- -------
World Income Focus Fund*+ $10,000 $10,144
Merrill Lynch G5A0 Index++ $10,000 $10,062
Weighted Index+++ $10,000 $10,581
<TABLE>
<C> <S>
* Assuming transaction costs and other operating expenses, including advisory fees. Does not include
insurance-related fees and expenses.
** Commencement of Operations.
+ World Income Focus Fund invests in US and foreign government and corporate bonds, including US high-yield bonds.
++ This unmanaged Index is comprised of intermediate-term Government bonds maturing in one to ten years.
+++ The weighted index consists of 33% First Boston High Yield and 67% JP Morgan Global Government Bond Index.
Past performance is not predictive of future performance.
</TABLE>
22
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH VARIABLE SERIES FUNDS, INC.--AMERICAN BALANCED FUND
SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE PERCENT OF
INDUSTRY HELD COMMON STOCKS COST (NOTE 1A) NET ASSETS
<S> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
AEROSPACE 42,000 United Technologies Corp......... $ 2,368,095 $ 2,640,750 1.7%
- ------------------------------------------------------------------------------------------------------------------------
BANKING 42,000 Morgan (J.P.) & Co............... 2,772,971 2,352,000 1.5
- ------------------------------------------------------------------------------------------------------------------------
BUILDING--RELATED 67,700 Stanley Works Co................. 2,802,105 2,420,275 1.5
- ------------------------------------------------------------------------------------------------------------------------
CHEMICALS 47,100 Eastman Chemical Co.............. 2,041,302 2,378,550 1.5
82,400 Nalco Chemical Co................ 2,742,236 2,760,400 1.7
4,783,538 5,138,950 3.2
- ------------------------------------------------------------------------------------------------------------------------
COMPUTER TECHNOLOGY 30,600 Hewlett-Packard Co............... 2,149,544 3,056,175 1.9
- ------------------------------------------------------------------------------------------------------------------------
CONSUMER--SERVICES 88,000 Kelly Services, Inc.............. 2,331,400 2,398,000 1.5
- ------------------------------------------------------------------------------------------------------------------------
ENERGY RELATED 121,000 + California Energy Co. Inc........ 2,187,016 1,890,625 1.2
- ------------------------------------------------------------------------------------------------------------------------
ENVIRONMENTAL CONTROL 167,792 + Wheelabrator Technologies Inc.... 2,869,023 2,474,932 1.6
- ------------------------------------------------------------------------------------------------------------------------
FOODS 184,069 Archer-Daniels-Midland Co........ 2,699,457 3,796,423 2.4
- ------------------------------------------------------------------------------------------------------------------------
HEALTHCARE 147,400 + Humana Inc....................... 1,940,466 3,334,925 2.1
- ------------------------------------------------------------------------------------------------------------------------
MACHINERY 77,700 Ingersoll-Rand Co................ 2,609,066 2,447,550 1.5
- ------------------------------------------------------------------------------------------------------------------------
MISCELLANEOUS--MANUFACTURING 137,900 Keystone International, Inc...... 3,285,477 2,344,300 1.5
- ------------------------------------------------------------------------------------------------------------------------
NATURAL GAS 66,900 Consolidated Natural Gas Co...... 3,024,660 2,374,950 1.5
- ------------------------------------------------------------------------------------------------------------------------
OFFICE RELATED 73,800 Pitney-Bowes, Inc................ 2,913,361 2,343,150 1.5
- ------------------------------------------------------------------------------------------------------------------------
OIL--INTEGRATED 90,500 Phillips Petroleum Co............ 2,637,514 2,963,875 1.9
- ------------------------------------------------------------------------------------------------------------------------
PETROLEUM & EQUIPMENT SERVICES 130,300 Dresser Industries, Inc.......... 2,729,193 2,459,413 1.6
- ------------------------------------------------------------------------------------------------------------------------
PHARMACEUTICALS 90,000 Abbott Laboratories.............. 2,827,672 2,936,250 1.8
101,000 Merck & Co., Inc................. 3,482,470 3,850,625 2.4
6,310,142 6,786,875 4.2
- ------------------------------------------------------------------------------------------------------------------------
PHOTOGRAPHY 57,400 Eastman Kodak Co................. 2,420,080 2,740,850 1.7
- ------------------------------------------------------------------------------------------------------------------------
PRINTING/PUBLISHING 51,200 Gannett Co., Inc................. 2,589,416 2,726,400 1.7
- ------------------------------------------------------------------------------------------------------------------------
TELECOMMUNICATIONS 57,800 American Telephone & Telegraph 3,086,880 2,904,450 1.8
Co...............................
59,600 Bell Atlantic Corp............... 3,218,314 2,965,100 1.9
86,500 Comsat Corp...................... 2,451,106 1,611,062 1.0
8,756,300 7,480,612 4.7
- ------------------------------------------------------------------------------------------------------------------------
TOTAL COMMON STOCKS 64,178,824 64,171,030 40.4
</TABLE>
- --------------------------------------------------------------------------------
23
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH VARIABLE SERIES FUNDS, INC.--AMERICAN BALANCED FUND
SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 1994 (CONCLUDED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE VALUE PERCENT OF
AMOUNT US GOVERNMENT OBLIGATIONS COST (NOTE 1A) NET ASSETS
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
US TREASURY NOTES US Treasury Notes:
$ 900,000 7.50% due 5/15/2002................. $ 955,500 $ 883,404 0.6%
3,500,000 6.375% due 8/15/2002................ 3,459,668 3,204,670 2.0
12,550,000 6.25% due 2/15/2003................. 12,863,703 11,349,844 7.1
12,750,000 5.75% due 8/15/2003................. 12,841,898 11,080,515 7.0
10,300,000 5.875% due 2/15/2004................ 9,682,422 8,981,909 5.7
11,300,000 7.25% due 5/15/2004................. 11,427,203 10,851,503 6.8
30,500,000 7.25% due 8/15/2004................. 30,594,766 29,275,120 18.4
10,000,000 7.875% due 11/15/2004............... 10,003,750 10,028,100 6.3
91,828,910 85,655,065 53.9
- ------------------------------------------------------------------------------------------------------------------------
TOTAL US GOVERNMENT OBLIGATIONS 91,828,910 85,655,065 53.9
- ------------------------------------------------------------------------------------------------------------------------
SHORT-TERM SECURITIES
- ------------------------------------------------------------------------------------------------------------------------
COMMERCIAL PAPER* 7,043,000 General Electric Capital Corp.,
5.80% due 1/03/1995................. 7,038,461 7,038,461 4.4
- ------------------------------------------------------------------------------------------------------------------------
TOTAL SHORT-TERM SECURITIES 7,038,461 7,038,461 4.4
- ------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS................... $163,046,195 156,864,556 98.7
------------
------------
OTHER ASSETS LESS LIABILITIES....... 2,086,184 1.3
NET ASSETS.......................... $158,950,740 100.0%
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
* Commercial Paper is traded on a discount basis; the interest rate shown is the discount rate paid at the time of
purchase by the Fund.
+ Non-income producing security.
</TABLE>
See Notes to Financial Statements.
24
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH VARIABLE SERIES FUNDS, INC.--BASIC VALUE FOCUS FUND
SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE PERCENT OF
INDUSTRY HELD COMMON STOCKS COST (NOTE 1A) NET ASSETS
- --------------------------------------------------------------------------------
DISCOUNT FROM BOOK VALUE
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
AEROSPACE 150,000 Aviall, Inc....................... $ 2,234,988 $ 1,143,750 0.7%
BANKING 70,000 Bankers Trust Company............. 4,143,450 3,876,250 2.4
HOME--BUILDERS 225,000 + Beazer Homes USA, Inc............. 3,558,474 2,615,625 1.6
SAVINGS & LOANS 150,000 + Brooklyn Bancorp Inc.............. 4,817,050 4,425,000 2.7
RETAIL 150,000 + Federated Department Stores,
Inc............................. 3,112,749 2,887,500 1.7
SAVINGS & LOANS 110,000 GP Financial Corp................. 2,160,925 2,268,750 1.4
OIL & GAS PRODUCERS 100,000 Gerrity Oil & Gas Corp............ 1,339,313 425,000 0.3
SAVINGS & LOANS 325,000 Greater N.Y. Savings Bank......... 2,895,742 2,803,125 1.7
STEEL 518,600 + Lone Star Technologies Inc........ 3,712,010 3,630,200 2.2
TECHNOLOGY 525,000 Micronics Computers, Inc.......... 2,470,294 2,231,250 1.4
TECHNOLOGY 585,000 + Network Systems Corp.............. 4,724,176 4,095,000 2.5
SAVINGS & LOANS 100,000 River Bank America................ 900,000 937,500 0.6
INSURANCE 210,000 TIG Holdings Inc.................. 3,709,325 3,937,500 2.4
OIL--REFINERS 300,000 Total Petroleum Ltd............... 3,525,248 3,750,000 2.3
OIL--REFINERS 150,000 Valero Energy Corp................ 3,126,262 2,531,250 1.5
46,430,006 41,557,700 25.4
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
BELOW-AVERAGE PRICE/EARNINGS RATIO
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
CONGLOMERATES 300,000 + ADT Ltd. (ADR) (a)................ 2,813,075 3,225,000 2.0
ELECTRONICS 650,000 Automated Security (Holdings) PLC
(ADR) (a)....................... 2,039,500 1,462,500 0.9
TEXTILES 200,000 + Burlington Industries, Inc........ 2,297,829 1,975,000 1.2
TECHNOLOGY 200,000 + Conner Peripherals, Inc........... 2,479,943 1,900,000 1.2
RETAIL APPAREL 100,000 + Fruit of the Loom, Inc............ 2,541,440 2,700,000 1.6
AUTOMOTIVE 100,000 General Motors Corp............... 4,824,087 4,225,000 2.6
INFORMATION PROCESSING 50,000 International Business Machine
Corp............................ 2,753,000 3,675,000 2.2
HOTELS 250,000 + John Q Hammons Hotels Inc......... 3,793,112 3,500,000 2.1
OIL & GAS PRODUCERS 152,000 KCS Energy Inc.................... 2,178,495 2,470,000 1.5
RETAIL SPECIALTY 200,000 + The Limited, Inc.................. 3,931,540 3,625,000 2.2
AUTO--RELATED 386,000 + National Auto Credit Inc.......... 4,405,603 4,583,750 2.8
SEMICONDUCTORS 155,000 + National Semiconductor Corp....... 2,734,089 3,022,500 1.8
INSURANCE 100,000 PartnerRe Holdings Ltd............ 2,029,881 2,062,500 1.3
TECHNOLOGY 150,000 + Syquest Technology Inc............ 1,847,920 2,662,500 1.6
INSURANCE 100,000 Travelers Corp.................... 3,791,524 3,250,000 2.0
44,461,038 44,338,750 27.0
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ABOVE-AVERAGE YIELD
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
OIL/DOMESTIC 25,000 Atlantic Richfield Co............. 2,460,592 2,543,750 1.6
REAL ESTATE INVESTMENT TRUST 120,000 Bay Apartment Communities, Inc.... 2,400,000 2,415,000 1.5
PHARMACEUTICALS 70,000 Bristol-Myers Squibb Co........... 3,867,699 4,051,250 2.5
REAL ESTATE INVESTMENT TRUST 120,000 Camden Property Trust............. 2,907,225 2,985,000 1.8
PHOTOGRAPHY 70,000 Eastman Kodak Co.................. 3,137,689 3,342,500 2.0
REAL ESTATE INVESTMENT TRUST 150,000 Evans Withycombe Residential, 3,013,688 3,150,000 1.9
Inc.............................
REAL ESTATE INVESTMENT TRUST 180,000 Felcor Suite Hotels, Inc.......... 3,872,250 3,442,500 2.1
OIL SERVICES 135,000 Halliburton Co.................... 4,438,600 4,471,875 2.7
RETAIL 314,500 K mart Corp....................... 5,429,472 4,088,500 2.5
REAL ESTATE INVESTMENT TRUST 120,000 Liberty Property Trust............ 2,406,656 2,355,000 1.4
PHARMACEUTICALS 100,000 Merck & Co., Inc.................. 3,127,175 3,812,500 2.3
OIL/DOMESTIC 140,000 Occidental Petroleum Corp......... 2,528,525 2,695,000 1.6
TOBACCO 60,000 Philip Morris Cos. Inc............ 3,341,700 3,450,000 2.1
SAVINGS & LOANS 125,000 River Bank America (Preferred).... 3,453,125 3,156,250 1.9
RETAIL 60,000 Sears, Roebuck & Co............... 3,043,578 2,760,000 1.7
FINANCIAL SERVICES 140,000 Student Loan Marketing
Association..................... 5,430,576 4,550,000 2.8
54,858,550 53,269,125 32.4
</TABLE>
- --------------------------------------------------------------------------------
25
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH VARIABLE SERIES FUNDS, INC.--BASIC VALUE FOCUS FUND
SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 1994 (CONCLUDED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE PERCENT OF
INDUSTRY HELD COMMON STOCKS COST (NOTE 1A) NET ASSETS
- --------------------------------------------------------------------------------
SPECIAL SITUATIONS
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
MEDICAL SERVICES 365,000 + Applied Bioscience International
Inc............................. $ 1,875,863 $ 2,007,500 1.2%
FOOD & HOUSEHOLD 150,000 Sara Lee Corp..................... 3,296,038 3,787,500 2.3
OIL--RELATED 285,000 + TETRA Technologies, Inc........... 2,185,200 3,348,750 2.0
OIL SERVICES 440,000 + Varco International, Inc.......... 2,676,579 2,750,000 1.7
10,033,680 11,893,750 7.2
<CAPTION>
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
TOTAL COMMON STOCKS 155,783,274 151,059,325 92.0
- --------------------------------------------------------------------------------
<CAPTION>
FACE
AMOUNT SHORT-TERM SECURITIES
<S> <C> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------
COMMERCIAL PAPER* $3,384,000 General Electric Capital Corp.,
5.80% due 1/03/1995............. 3,381,819 3,381,819 2.1
3,000,000 Nomura Holding America, Inc.,
5.83% due 1/27/1995............. 2,986,397 2,986,397 1.8
6,500,000 Xerox Credit Corp., 5.95% due
1/17/1995....................... 6,480,825 6,480,825 3.9
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
TOTAL SHORT-TERM SECURITIES 12,849,041 12,849,041 7.8
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
TOTAL INVESTMENTS................. $168,632,315 163,908,366 99.8
------------
------------
OTHER ASSETS LESS LIABILITIES..... 398,353 0.2
NET ASSETS........................ $164,306,719 100.0%
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<C> <S>
* Commercial Paper is traded on a discount basis; the interest rates shown are the discount rates paid at the time of
purchase by the Fund.
(a) American Depositary Receipt (ADR).
+ Non-income producing security.
</TABLE>
See Notes to Financial Statements.
26
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH VARIABLE SERIES FUNDS, INC.--DEVELOPING CAPITAL MARKETS FOCUS FUND
SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES HELD/ VALUE PERCENT OF NET
AFRICA INDUSTRY FACE AMOUNT INVESTMENTS COST (NOTE 1A) ASSETS
<S> <C> <C> <C> <C> <C> <C> <C> <C>
SOUTH AFRICA MULTI--INDUSTRY 6,000 ASA Ltd................. $ 281,052 $ 269,250 0.7%
22,000 + The Morgan Stanley
Africa Investment
Fund, Inc............. 254,320 250,250 0.7
18,000 New South Africa Fund,
Inc................... 257,580 254,250 0.7
18,000 + Southern Africa Fund,
Inc................... 264,224 249,750 0.7
1,057,176 1,023,500 2.8
TRANSPORTATION ZAL 12,000,000 Transnet Ltd., 15.00%
due 10/01/1995........ 2,886,806 2,970,458 8.1
TOTAL INVESTMENTS IN
SOUTH AFRICA 3,943,982 3,993,958 10.9
TOTAL INVESTMENTS IN
AFRICA 3,943,982 3,993,958 10.9
EUROPE
GREECE BEVERAGE 9,600 Hellenic Bottling Co.
S.A. (Bearer)......... 281,725 340,142 0.9
TOTAL INVESTMENTS IN
GREECE 281,725 340,142 0.9
HUNGARY FOOD 2,065 Pick Szeged
Reszvenytarasag (ADR)
(a)................... 141,347 121,298 0.3
TOTAL INVESTMENTS IN
HUNGARY 141,347 121,298 0.3
PORTUGAL ENGINEERING & 25,000 Sociedade de Construsoes
CONSTRUCTION Soares de Costa
S.A................... 519,168 471,757 1.3
5,000 Sociedade de Construsoes
Soares de Costa S.A.
(Baby Shares)......... 0 94,351 0.3
2,500 Sociedade de Construsoes
Soares de Costa S.A.
(Ordinary)............ 31,270 47,176 0.1
550,438 613,284 1.7
RETAIL 48,000 Sonae Investimentos-SGPS
S.A................... 1,006,931 1,105,347 3.0
TOTAL INVESTMENTS IN
PORTUGAL 1,557,369 1,718,631 4.7
RUSSIA MULTI--INDUSTRY 60,000 + Fleming Russia 588,000 405,000 1.1
Securities Fund (ADR)
(a)...................
TOTAL INVESTMENTS IN
RUSSIA 588,000 405,000 1.1
SRI LANKA DIVERSIFIED 6,500 + John Keells Holdings
Corp. (GDR) (b)....... 65,000 58,500 0.2
TOTAL INVESTMENTS IN
SRI LANKA 65,000 58,500 0.2
TURKEY BEVERAGE 397,500 Erciyas Biracilik Ve
Malt Sanayii A.S...... 322,290 294,253 0.8
BUILDING MATERIALS 305,250 Alarko Holdings A.S..... 239,118 261,643 0.7
72,600 + Cimentas Izmir Cimento
Fabrikasi T.A.S....... 56,392 50,914 0.1
295,510 312,557 0.8
INSURANCE 93,000 Akisgorta A.S........... 23,250 18,842 0.0
STEEL 1,971,000 + Izmir Demir Celik
Sanayii A.S........... 147,748 107,509 0.3
TOTAL INVESTMENTS IN
TURKEY 788,798 733,161 1.9
TOTAL INVESTMENTS IN
EUROPE 3,422,239 3,376,732 9.1
</TABLE>
27
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH VARIABLE SERIES FUNDS, INC.--DEVELOPING CAPITAL MARKETS FOCUS FUND
SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 1994 (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LATIN SHARES HELD/ VALUE PERCENT OF NET
AMERICA INDUSTRY FACE AMOUNT INVESTMENTS COST (NOTE 1A) ASSETS
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ARGENTINA OIL & RELATED 27,000 Yacimientos Petroliferos
Fiscales S.A.
(Sponsored) (ADR)
(a)................... $ 695,315 $ 577,125 1.6%
REAL ESTATE 19,000 Inversiones y
Representaciones S.A.
(GDR) (b)............. 495,140 503,500 1.4
TOBACCO 100,126 + Nobleza Piccardo S.A.... 501,811 425,535 1.2
TOTAL INVESTMENTS IN
ARGENTINA 1,692,266 1,506,160 4.2
BRAZIL APPLIANCES 1,335,000 Brasmotor Group S.A.
(Preferred)........... 582,433 541,259 1.5
AUTOMOTIVE 55,000 + CAPCO Automotive
Products Corp. S.A.... 719,383 660,000 1.8
STEEL 339,000,000 Usinas Siderurgicas de
Minas Gerais--Usiminas
S.A. (Preferred)...... 578,807 460,816 1.3
TELECOMMUNICATIONS 25,480 Telecomunicacoes
Brasileiras
S.A.--Telebras (ADR)
(a)................... 1,048,742 1,133,860 3.1
1,600,000 Telecomunicacoes
Brasileiras
S.A.--Telebras PN
(Preferred)........... 68,826 71,678 0.2
1,117,568 1,205,538 3.3
UTILITIES 31,100 + Companhia Energetica de
Minas Gerais S.A.
(CEMIG) (ADR) (a)..... 558,442 730,850 2.0
UTILITIES--ELECTRIC 117,000 Centrais Eletricas
Brasileiras
S.A.--Eletrobras 'B'
(Preferred)........... 40,181 40,660 0.1
3,828,000 Light--Servicios de
Electricidade S.A..... 1,631,835 1,384,596 3.8
1,672,016 1,425,256 3.9
TOTAL INVESTMENTS IN
BRAZIL 5,228,649 5,023,719 13.8
CHILE TELECOMMUNICATIONS 5,500 Compania de Telefonos de
Chile S.A. (ADR)
(a)................... 500,110 433,125 1.2
TOTAL INVESTMENTS IN
CHILE 500,110 433,125 1.2
ECUADOR BUILDING MATERIALS 260 La Cemento Nacional
C.A................... 100,100 96,200 0.3
TOTAL INVESTMENTS IN
ECUADOR 100,100 96,200 0.3
MEXICO BEVERAGE 17,500 Grupo Embotellador de
Mexico, S.A. de C.V.
(GEMEX) (ADR) (a)..... 497,000 251,562 0.7
BUILDING & 39,000 Tolmex, S.A. de C.V. 455,106 330,306 0.9
CONSTRUCTION 'B2'..................
DIVERSIFIED 60,000 Desc Sociedad de Fomento
Industrial, S.A. de
C.V. 'C'.............. 459,346 341,633 0.9
FINANCIAL SERVICES 26,000 Grupo Financiero (GBM)
Atlantico, S.A. de
C.V. (Class L)........ 517,525 182,000 0.5
GLASS MANUFACTURING
51,500 Vitro, S.A. de C.V...... 354,538 241,209 0.7
6,200 Vitro, S.A. de C.V.
(ADR) (a)............. 131,105 86,800 0.2
485,643 328,009 0.9
LEISURE 56,000 + Grupo Carso, S.A. de
C.V. 'A1'............. 562,674 419,429 1.1
METALS 12,000 Grupo Simec, S.A. de
C.V. (ADR) (a)........ 301,145 181,500 0.5
NEWSPAPER/ PUBLISHING 264,000 Grupo Fernandez
Editores, S.A. de
C.V................... 422,478 287,706 0.8
TELECOMMUNICATIONS 10,000 Telefonos de Mexico,
S.A. de C.V. (ADR)
(a)................... 585,600 410,000 1.1
TOTAL INVESTMENTS IN
MEXICO................ 4,286,517 2,732,145 7.4
</TABLE>
28
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH VARIABLE SERIES FUNDS, INC.--DEVELOPING CAPITAL MARKETS FOCUS FUND
SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 1994 (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LATIN
AMERICA SHARES HELD/ VALUE PERCENT OF NET
(CONCLUDED) INDUSTRY FACE AMOUNT INVESTMENTS COST (NOTE 1A) ASSETS
<S> <C> <C> <C> <C> <C> <C> <C> <C>
PERU BANKING 25,000 + Banco Weise Limitado
S.A. (ADR) (a)........ $ 493,750 $ 468,750 1.3%
TOTAL INVESTMENTS IN
PERU 493,750 468,750 1.3
TOTAL INVESTMENTS IN
LATIN AMERICA 12,301,392 10,260,099 28.2
PACIFIC
BASIN/ASIA
- ------------------------------------------------------------------------------------------------------------------------
AUSTRALIA MERCHANDISING 18,600 Amway Asia Pacific
Ltd................... 540,642 604,500 1.6
TOTAL INVESTMENTS IN
AUSTRALIA 540,642 604,500 1.6
HONG KONG AUTOMOTIVE 254,000 Sime Darby (Hong Kong)
Ltd................... 406,139 282,368 0.8
DIVERSIFIED 116,000 Jardine Matheson
Holdings, Ltd......... 859,252 828,464 2.3
MACHINERY 252,000 Beiren Printing
Machinery Holdings
Ltd................... 138,774 70,036 0.2
MULTI--INDUSTRY 1,091,000 Sinocan Holdings Ltd.... 215,590 242,570 0.7
TOTAL INVESTMENTS IN
HONG KONG 1,619,755 1,423,438 4.0
INDIA BROADCASTING & 37,600 + Videocon International
PUBLISHING Ltd. (ADR) (a)........ 323,217 174,088 0.5
LEISURE 40,400 + East India Hotels,
Ltd................... 640,744 585,800 1.6
TOBACCO 31,500 + Indian Tobacco Co.
Ltd................... 419,437 315,000 0.9
TOTAL INVESTMENTS IN
INDIA 1,383,398 1,074,888 3.0
INDONESIA BROADCASTING & $ 15,000 P.T. Surya Citra
PUBLISHING Television, 4.00% due
7/01/1997............. 15,000 14,850 0.0
FOOD & HOUSEHOLD 592,000 + P.T. Wicaksana Overseas
PRODUCTS International......... 1,160,794 1,697,588 4.6
TOTAL INVESTMENTS IN
INDONESIA 1,175,794 1,712,438 4.6
MALAYSIA AUTOMOTIVE 79,400 Sime Darby BHD.......... 191,533 181,975 0.5
BROADCASTING 93,000 Sistem Televisyen
Malaysia BHD.......... 267,129 202,213 0.5
FINANCIAL SERVICES 57,000 Commerce Asset--Holdings
BHD................... 293,164 230,010 0.6
FOODS 30,000 Nestle (Malaysia) BHD... 197,136 199,804 0.5
NEWSPAPER/ PUBLISHING 76,000 New Straits Times Press
BHD................... 311,411 244,153 0.7
TELECOMMUNICATIONS 115,000 Leader Universal
Holdings BHD.......... 407,073 369,442 1.0
TOTAL INVESTMENTS IN
MALAYSIA 1,667,446 1,427,597 3.8
NEW ZEALAND TRANSPORTATION 7,700 Ports of Auckland 10,869 11,085 0.0
Ltd...................
TOTAL INVESTMENT IN NEW
ZEALAND 10,869 11,085 0.0
PHILIPPINES MULTI--INDUSTRY 10,500 + Benpres Holdings Corp.
(c)................... 106,200 94,500 0.3
TELECOMMUNICATIONS $ 1,000,000 Philippine Long Distance
Telephone Co., 10.625%
due 6/02/2004......... 1,015,000 960,000 2.6
TOTAL INVESTMENTS IN THE
PHILIPPINES 1,121,200 1,054,500 2.9
SOUTH KOREA UTILITIES-ELECTRIC 77,000 + Korea Electric Power
Corp.................. 1,606,935 1,645,875 4.5
TOTAL INVESTMENTS IN
SOUTH KOREA 1,606,935 1,645,875 4.5
</TABLE>
29
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH VARIABLE SERIES FUNDS, INC.--DEVELOPING CAPITAL MARKETS FOCUS FUND
SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 1994 (CONCLUDED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PACIFIC
BASIN/ASIA VALUE PERCENT OF NET
(CONCLUDED) INDUSTRY SHARES HELD INVESTMENTS COST (NOTE 1A) ASSETS
<S> <C> <C> <C> <C> <C> <C> <C> <C>
TAIWAN MERCHANDISING 12,047 Hocheng Group Corp.
(ADR) (a) (c)......... $ 349,363 $ 271,057 0.7%
TOTAL INVESTMENTS IN
TAIWAN 349,363 271,057 0.7
THAILAND APPLIANCES & HOUSEHOLD 41,400 Karat Sanitary Ware Co.,
DURABLES Ltd................... 244,164 169,922 0.5
AUTOMOTIVE PARTS 13,700 Swedish Motor Corp.
Ltd................... 90,197 84,618 0.2
BANKING 65,000 Bangkok Bank Ltd.
'Foreign'............. 616,906 694,162 1.9
REAL ESTATE 56,000 Bangkok Land Company
Ltd................... 181,816 139,470 0.4
UTILITIES 5,100 Sanyo Universal Electric
Co., Ltd.............. 120,776 118,279 0.3
TOTAL INVESTMENTS IN
THAILAND 1,253,859 1,206,451 3.3
TOTAL INVESTMENTS IN THE
PACIFIC BASIN/ASIA 10,729,261 10,431,829 28.4
FACE AMOUNT SHORT-TERM SECURITIES
COMMERCIAL $ 960,000 General Electric Capital
PAPER** Corp., 5.80% due
1/03/1995............. 959,536 959,536 2.6
COMMERCIAL
PAPER**--FOREIGN Mexican Cetes
(Certificados de la
Tesorera de la
Federacion):
449,030 23.32%* due 1/26/1995... 92,019 90,235 0.2
610,690 23.32%* due 2/02/1995... 124,600 120,326 0.3
327,240 23.32%* due 2/16/1995... 66,188 64,720 0.2
810,000 23.32%* due 2/23/1995... 163,124 159,357 0.4
445,931 434,638 1.1
US GOVERNMENT &
AGENCY OBLIGATIONS** Federal Home Loan Bank:
1,000,000 5.57% due 1/04/1995..... 999,381 999,381 2.7
1,500,000 5.76% due 1/17/1995..... 1,495,920 1,495,920 4.1
1,000,000 Federal Home Loan
Mortgage Association,
5.91% due 1/12/1995... 998,030 998,030 2.7
Federal National
Mortgage Association:
3,500,000 5.78% due 1/23/1995..... 3,487,075 3,487,075 9.5
1,500,000 5.74% due 1/30/1995..... 1,492,825 1,492,825 4.1
8,473,231 8,473,231 23.1
- ------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN
SHORT-TERM SECURITIES 9,878,698 9,867,405 26.8
TOTAL INVESTMENTS.......................... $40,275,572 37,930,023 103.4
LIABILITIES IN EXCESS OF OTHER ASSETS...... (1,254,271) (3.4)
NET ASSETS................................. $36,675,752 100.0%
</TABLE>
<TABLE>
<C> <S>
(a) American Depositary Receipt (ADR).
(b) Global Depositary Receipt (GDR).
(c) Restricted securities as to resale. The value of the Fund's investment in restricted securities was approximately
$366,000, representing 1.00% of net assets.
- ------------------------------------------------------------------------------------------------------------------------
ACQUISITION VALUE
ISSUE DATES COST (NOTE 1A)
- ------------------------------------------------------------------------------------------------------------------------
Benpres Holdings Corp.................................................................. 10/25/1994 $ 106,200 $ 94,500
Hocheng Group Corp. (ADR).............................................................. 8/09/1994 349,363 271,057
- ------------------------------------------------------------------------------------------------------------------------
TOTAL.................................................................................. $ 455,563 $ 365,557
- ------------------------------------------------------------------------------------------------------------------------
* Represents the yield to maturity on this zero coupon issue.
** 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 of the Fund.
+ Non-income producing security.
</TABLE>
See Notes to Financial Statements.
30
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH VARIABLE SERIES FUNDS, INC.--DOMESTIC MONEY MARKET FUND
SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE INTEREST MATURITY VALUE
AMOUNT ISSUE RATE* DATE (NOTE 1A)
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
BANK NOTES--2.7% $ 10,000,000 PNC Bank N.A..................................... 5.15 % 2/22/95 $ 9,984,066
- ------------------------------------------------------------------------------------------------------------------------
TOTAL BANK NOTES (COST -- $9,999,001) 9,984,066
- ------------------------------------------------------------------------------------------------------------------------
COMMERCIAL
PAPER--67.6% 5,000,000 ABN-AMRO North American Finance, Inc............. 5.42 1/04/95 4,996,181
10,000,000 ANZ (Delaware), Inc.............................. 5.05 1/20/95 9,966,750
7,000,000 Abbey National N.A. Corp......................... 5.07 2/28/95 6,929,417
5,000,000 Abbey National N.A. Corp......................... 5.075 3/02/95 4,946,611
5,000,000 Avco Financial Services, Inc..................... 5.68 2/14/95 4,961,667
5,134,000 BTR Dunlop Finance Inc........................... 5.40 1/13/95 5,122,979
10,000,000 Bankers Trust New York Corp...................... 5.41 1/27/95 9,955,278
1,000,000 Bankers Trust New York Corp...................... 5.40 1/30/95 994,963
4,794,000 Bankers Trust New York Corp...................... 5.58 4/12/95 4,707,588
8,323,000 CS First Boston, Inc............................. 5.50 1/25/95 8,288,436
5,000,000 CS First Boston, Inc............................. 6.00 2/10/95 4,965,000
10,000,000 Deer Park Refining, L.P.......................... 6.10 1/19/95 9,966,111
5,125,000 Falcon Asset Securization Corp................... 6.00 1/09/95 5,116,458
5,000,000 Ford Motor Credit Co............................. 5.42 1/11/95 4,990,800
6,000,000 Ford Motor Credit Co............................. 5.42 1/12/95 5,988,040
5,000,000 General Electric Capital Corp.................... 5.50 1/09/95 4,992,333
5,000,000 General Electric Capital Corp.................... 5.03 1/23/95 4,980,833
5,000,000 General Electric Capital Corp.................... 5.48 1/24/95 4,980,035
3,974,000 Goldman Sachs Group L.P.......................... 4.95 2/01/95 3,952,507
4,000,000 Goldman Sachs Group L.P.......................... 5.15 3/01/95 3,957,978
5,000,000 Goldman Sachs Group L.P.......................... 5.25 3/13/95 4,937,139
5,000,000 International Lease Finance Corp................. 5.42 1/09/95 4,992,333
5,000,000 International Lease Finance Corp................. 5.33 1/20/95 4,983,375
1,500,000 MCA Funding Corp................................. 5.50 1/25/95 1,493,771
4,000,000 Miles Inc........................................ 5.70 2/10/95 3,972,000
5,000,000 NationsBank Corp................................. 5.33 1/23/95 4,980,833
5,000,000 New Center Asset Trust........................... 5.44 1/19/95 4,984,167
6,000,000 New Center Asset Trust........................... 5.48 1/24/95 5,976,042
4,000,000 New Center Asset Trust........................... 5.72 2/08/95 3,973,333
5,000,000 Norfolk Southern Corporation..................... 5.75 2/07/95 4,967,933
4,000,000 Panasonic Finance, Inc........................... 5.50 1/26/95 3,982,750
9,500,000 Panasonic Finance, Inc........................... 6.20 3/29/95 9,354,386
5,000,000 Preferred Receivables Funding Corp............... 6.10 1/05/95 4,994,917
10,000,000 Premium Funding, Inc., Series A.................. 6.05 1/13/95 9,976,472
7,000,000 Riverwoods Funding Corp.......................... 5.95 1/25/95 6,969,919
15,000,000 SBC Finance (Delaware) Inc....................... 5.43 1/20/95 14,950,125
3,000,000 Santander Finance (Delaware) Inc................. 5.40 1/17/95 2,991,450
3,340,000 Sheffield Receivables Corp....................... 5.90 2/01/95 3,321,936
10,000,000 Societe Generale North America, Inc.............. 5.40 1/23/95 9,961,667
1,126,000 Transamerica Finance Corp........................ 5.40 1/18/95 1,122,613
5,000,000 Transamerica Finance Corp........................ 5.80 2/17/95 4,959,167
4,000,000 US Borax Inc..................................... 5.70 2/07/95 3,974,347
8,500,000 WCP Funding Inc.................................. 6.17 3/03/95 8,407,775
711,000 Windmill Funding Corp............................ 6.00 1/13/95 709,341
- ------------------------------------------------------------------------------------------------------------------------
TOTAL COMMERCIAL PAPER (COST--$245,780,511) 245,697,756
- ------------------------------------------------------------------------------------------------------------------------
MASTER NOTES+--2.2% 5,000,000 Bear Stearns Cos., Inc. (The).................... 5.978 2/17/95 5,000,409
3,000,000 Goldman Sachs Group L.P.......................... 6.07 5/26/95 3,000,000
- ------------------------------------------------------------------------------------------------------------------------
TOTAL MASTER NOTES (COST--$8,000,409) 8,000,409
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
31
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH VARIABLE SERIES FUNDS, INC.--DOMESTIC MONEY MARKET FUND
SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 1994 (CONCLUDED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE INTEREST MATURITY VALUE
AMOUNT ISSUE RATE* DATE (NOTE 1A)
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
US GOVERNMENT, AGENCY
& INSTRUMENTALITY $ 2,000,000 US Treasury Bills................................ 3.43 % 2/09/95 $ 1,987,427
OBLIGATIONS-- 9,000,000 US Treasury Bills................................ 4.905 3/16/95 8,896,830
DISCOUNT--4.9% 7,000,000 US Treasury Bills................................ 6.335 7/06/95 6,775,280
- ------------------------------------------------------------------------------------------------------------------------
TOTAL US GOVERNMENT, AGENCY & INSTRUMENTALITY OBLIGATIONS--
DISCOUNT (COST--$17,674,804) 17,659,537
- ------------------------------------------------------------------------------------------------------------------------
US GOVERNMENT, AGENCY
& INSTRUMENTALITY 9,500,000 Federal Farm Credit Bank......................... 5.19 3/01/95 9,481,950
OBLIGATIONS-- 5,000,000 Federal Home Loan Bank........................... 5.79 4/28/95 4,987,500
NON-DISCOUNT--24.2% 3,000,000 Federal Home Loan Bank+.......................... 5.93 12/28/95 3,000,000
1,500,000 Federal Home Loan Bank+.......................... 5.83 5/06/96 1,496,404
5,000,000 Federal Home Loan Bank+.......................... 5.82 9/12/96 4,995,506
10,000,000 Federal Home Loan Mortgage Corp.+................ 5.86 9/01/95 9,998,725
1,000,000 Federal Home Loan Mortgage Corp.+................ 5.75 6/03/96 997,154
10,000,000 Federal Home Loan Mortgage Corp.+................ 5.95 6/07/96 9,995,588
3,000,000 Federal National Mortgage Association+........... 5.70 6/01/95 2,999,877
2,000,000 Federal National Mortgage Association+........... 5.83 5/13/96 2,000,000
2,000,000 Federal National Mortgage Association+........... 5.83 8/13/96 2,000,000
15,000,000 Federal National Mortgage Association+........... 6.093 10/11/96 15,000,000
2,000,000 Federal National Mortgage Association+........... 5.95 5/19/97 2,000,000
2,000,000 Federal National Mortgage Association+........... 6.00 5/14/98 2,000,000
2,000,000 Student Loan Marketing Association+.............. 6.32 4/17/95 2,002,984
1,500,000 Student Loan Marketing Association+.............. 6.02 6/02/95 1,501,397
600,000 Student Loan Marketing Association+.............. 6.07 3/20/96 601,620
3,000,000 Student Loan Marketing Association+.............. 5.90 5/14/96 3,003,150
4,000,000 Student Loan Marketing Association+.............. 6.17 8/22/96 4,019,534
2,000,000 Student Loan Marketing Association+.............. 6.04 3/03/97 2,000,502
1,500,000 US Treasury Notes................................ 3.875 4/30/95 1,488,984
1,000,000 US Treasury Notes................................ 4.125 6/30/95 988,437
750,000 US Treasury Notes................................ 3.875 8/31/95 735,234
500,000 US Treasury Notes................................ 4.00 1/31/96 482,812
- ------------------------------------------------------------------------------------------------------------------------
TOTAL US GOVERNMENT, AGENCY & INSTRUMENTALITY OBLIGATIONS--
NON-DISCOUNT (COST--$87,860,716) 87,777,358
- ------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (COST--$369,315,441)--101.6%... 369,119,126
LIABILITIES IN EXCESS OF OTHER ASSETS --(1.6%)... (5,920,026)
-------------
NET ASSETS--100.0%............................... $ 363,199,100
-------------
-------------
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
* Commercial Paper and certain US Government, Agency & Instrumentality Obligations are traded on a discount basis; the
interest rates shown are the discount rates paid at the time of purchase by the Fund. Other securities bear interest
at the rates shown, payable at fixed dates or upon maturity. The interest rates on variable rate securities are
adjusted periodically based upon appropriate indexes. The interest rates shown are the rates in effect at December 31,
1994.
+ Variable Rate Notes.
</TABLE>
See Notes to Financial Statements.
32
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH VARIABLE SERIES FUNDS, INC.--EQUITY GROWTH FUND
SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARE VALUE PERCENT OF
INDUSTRY HELD COMMON STOCKS COST (NOTE 1A) NET ASSETS
<S> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
AEROSPACE & DEFENSE 80,000 Teledyne, Inc....................... $ 1,354,796 $ 1,610,000 0.9%
- ------------------------------------------------------------------------------------------------------------------------
AIR TRANSPORTATION 100,000 Skywest, Inc........................ 2,305,063 1,225,000 0.7
- ------------------------------------------------------------------------------------------------------------------------
AUTO-RELATED 115,000 + Automotive Industries Inc........... 2,842,963 2,328,750 1.4
- ------------------------------------------------------------------------------------------------------------------------
AUTOMOBILE PARTS 50,000 + Custom Chrome, Inc.................. 1,149,000 843,750 0.5
- ------------------------------------------------------------------------------------------------------------------------
BANKING 90,000 Cole Taylor Financial Group, Inc.... 1,598,829 1,845,000 1.1
110,000 Collective Bancorp, Inc............. 2,208,751 1,856,250 1.1
50,000 First Financial Corp................ 743,437 675,000 0.4
50,000 Mercantile Bancorp., Inc............ 1,621,750 1,562,500 0.9
100,000 Midlantic National Bank............. 2,628,125 2,650,000 1.6
100,000 Roosevelt Financial Group, Inc...... 1,515,001 1,487,500 0.9
50,000 TCF Financial Corp.................. 1,962,682 2,062,500 1.2
12,278,575 12,138,750 7.2
- ------------------------------------------------------------------------------------------------------------------------
BUILDING MATERIALS 140,000 Apogee Enterprises Inc.............. 1,943,285 2,380,000 1.4
- ------------------------------------------------------------------------------------------------------------------------
BUSINESS SERVICES 95,000 Amresco, Inc........................ 781,875 593,750 0.3
70,000 Reynolds & Reynolds Co. (The) (Class 1,649,200 1,750,000 1.0
A)..................................
2,431,075 2,343,750 1.3
- ------------------------------------------------------------------------------------------------------------------------
CAPITAL EQUIPMENT 155,000 + BWIP Holdings, Inc.................. 2,732,500 2,635,000 1.5
- ------------------------------------------------------------------------------------------------------------------------
CHEMICALS 150,000 Crompton & Knowles Corp............. 2,530,875 2,475,000 1.5
45,000 + Mississippi Chemical Corp........... 675,000 770,625 0.5
3,205,875 3,245,625 2.0
- ------------------------------------------------------------------------------------------------------------------------
COMMERCIAL SERVICES 80,000 + Devry, Inc.......................... 2,025,179 2,440,000 1.4
- ------------------------------------------------------------------------------------------------------------------------
COMPUTER SOFTWARE 70,000 + FileNet Corp........................ 1,838,121 1,872,500 1.1
57,000 Metatec Corp. (Class A)............. 629,250 498,750 0.3
25,000 + Phamis, Inc......................... 300,000 446,875 0.3
75,000 + Sterling Software, Inc.............. 2,318,689 2,756,250 1.6
5,086,060 5,574,375 3.3
- ------------------------------------------------------------------------------------------------------------------------
COMPUTERS 130,000 + AST Research, Inc................... 1,872,500 1,885,000 1.1
55,000 + Electronics For Imaging, Inc........ 907,500 1,498,750 0.9
65,000 Exide Electronics Group Inc......... 1,200,000 1,251,250 0.7
100,000 + Read-Rite Corp...................... 1,301,953 1,837,500 1.1
5,281,953 6,472,500 3.8
- ------------------------------------------------------------------------------------------------------------------------
CONSUMER PRODUCTS & 130,000 Scotts Co. (Class A)................ 2,310,625 2,031,250 1.2
SERVICES
- ------------------------------------------------------------------------------------------------------------------------
DIVERSIFIED 65,000 Lancaster Colony Corp............... 2,248,125 1,909,375 1.1
- ------------------------------------------------------------------------------------------------------------------------
ELECTRICAL EQUIPMENT 120,000 + Willcox & Gibbs, Inc................ 617,266 705,000 0.4
- ------------------------------------------------------------------------------------------------------------------------
ELECTRONIC/INSTRUMENTS 70,000 BMC Industries Inc.................. 566,421 1,093,750 0.6
80,000 DOVatron International, Inc......... 1,871,250 2,060,000 1.2
100,000 + Electro Scientific Industries, 1,843,994 2,137,500 1.3
Inc.................................
35,000 + Kent Electronics Corp............... 730,910 1,386,875 0.8
155,000 Methode Electronics Inc. (Class 1,895,370 2,557,500 1.5
A)..................................
30,750 Vishay Intertechnology Inc.......... 1,007,977 1,506,750 0.9
7,915,922 10,742,375 6.3
- ------------------------------------------------------------------------------------------------------------------------
ENTERTAINMENT 45,000 + Regal Cinemas, Inc.................. 785,625 1,113,750 0.7
- ------------------------------------------------------------------------------------------------------------------------
ENVIRONMENTAL 200,000 Calgon Carbon Corp.................. 2,433,712 2,075,000 1.2
80,000 Donaldson Inc....................... 1,366,077 1,920,000 1.1
92,400 IMCO Recycling Inc.................. 1,262,004 1,397,550 0.8
87,500 TETRA Technologies, Inc............. 1,201,250 1,509,375 0.9
6,263,043 6,901,925 4.0
- ------------------------------------------------------------------------------------------------------------------------
FINANCIAL SERVICES 75,000 GFC Financial Corp.................. 2,393,126 2,381,250 1.4
150,000 + National Auto Credit, Inc........... 1,933,125 1,781,250 1.0
4,326,251 4,162,500 2.4
- ------------------------------------------------------------------------------------------------------------------------
FOODS/FOOD PROCESSING 50,000 + Smithfield Foods, Inc............... 1,590,000 1,587,500 0.9
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
33
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH VARIABLE SERIES FUNDS, INC.--EQUITY GROWTH FUND
SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 1994 (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE PERCENT OF
INDUSTRY HELD COMMON STOCKS COST (NOTE 1A) NET ASSETS
<S> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
GAMING 135,000 Players International Inc............ $ 3,020,625 $ 3,003,750 1.8%
100,000 + Shuffle Master, Inc.................. 1,297,500 1,187,500 0.7
50,000 Sodak Gaming Inc..................... 1,268,874 762,500 0.4
5,586,999 4,953,750 2.9
- ------------------------------------------------------------------------------------------------------------------------
HEALTH SERVICES 100,000 Advocat, Inc......................... 950,000 1,325,000 0.8
150,000 + Ornda Health Corp.................... 2,331,250 1,837,500 1.1
100,000 + Physician Reliance Network, Inc...... 1,400,000 1,850,000 1.1
40,000 + Physicians Health Services, Inc...... 882,500 1,070,000 0.6
80,000 Sun Healthcare Group Inc............. 1,336,150 2,030,000 1.2
6,899,900 8,112,500 4.8
- ------------------------------------------------------------------------------------------------------------------------
HEALTHCARE--PRODUCTS & 85,000 Sybron Corp.......................... 2,357,265 2,932,500 1.7
SERVICES 110,000 Thermedics, Inc...................... 1,535,333 1,402,500 0.8
3,892,598 4,335,000 2.5
- ------------------------------------------------------------------------------------------------------------------------
HIGH TECHNOLOGY 100,000 Thermotrex Corp...................... 1,589,918 1,350,000 0.8
30,000 + Videonics Inc........................ 330,000 367,500 0.2
1,919,918 1,717,500 1.0
- ------------------------------------------------------------------------------------------------------------------------
INSURANCE 93,700 + Acceptance Insurance Holdings, 1,345,459 1,405,500 0.8
Inc..................................
105,000 Gainsco Inc.......................... 1,031,649 866,250 0.5
2,377,108 2,271,750 1.3
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
MANUFACTURED HOUSING 125,000 Clayton Homes, Inc.................. 1,920,136 1,968,750 1.2
100,000 Oakwood Homes Corp.................. 2,299,368 2,437,500 1.4
150,000 Redman Industries Inc............... 2,660,186 2,437,500 1.4
6,879,690 6,843,750 4.0
- ------------------------------------------------------------------------------------------------------------------------
MANUFACTURING 75,000 Modine Manufacturing Co............. 2,045,000 2,118,750 1.2
- ------------------------------------------------------------------------------------------------------------------------
MEDIA/PUBLISHING 100,000 + Electronic Arts, Inc................ 1,994,731 1,912,500 1.1
- ------------------------------------------------------------------------------------------------------------------------
MEDICAL SERVICES 150,000 + North American Biologicals, Inc..... 1,050,000 1,087,500 0.6
- ------------------------------------------------------------------------------------------------------------------------
MEDICAL SUPPLIES 80,000 Beckman Instruments, Inc............ 2,217,984 2,230,000 1.3
70,000 Dentsply International, Inc......... 2,378,125 2,170,000 1.3
50,000 + Isolyser Company, Inc............... 904,169 900,000 0.5
102,000 + Maxxim Medical Inc.................. 1,281,120 1,479,000 0.9
6,781,398 6,779,000 4.0
- ------------------------------------------------------------------------------------------------------------------------
METALS 65,000 Harsco Corp......................... 2,668,892 2,656,875 1.6
100,000 + Magma Copper Co..................... 1,632,000 1,675,000 1.0
79,500 Material Sciences Corp.............. 1,107,365 1,262,063 0.7
5,408,257 5,593,938 3.3
- ------------------------------------------------------------------------------------------------------------------------
OFFICE EQUIPMENT 80,000 Danka Business Systems PLC.......... 1,685,000 1,710,000 1.0
- ------------------------------------------------------------------------------------------------------------------------
OIL & GAS 125,000 Lomak Petroleum Inc................. 915,625 828,125 0.5
60,000 Parker & Parsley Development
Partners............................ 1,380,798 1,230,000 0.7
2,296,423 2,058,125 1.2
- ------------------------------------------------------------------------------------------------------------------------
PRINTING 107,000 Merrill Corp........................ 2,289,739 1,819,000 1.1
- ------------------------------------------------------------------------------------------------------------------------
PRINTING & 60,000 Banta Corp.......................... 1,973,750 1,800,000 1.1
PUBLISHING 50,000 International Imaging Materials 864,374 1,612,500 0.9
Inc.................................
2,838,124 3,412,500 2.0
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
34
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH VARIABLE SERIES FUNDS, INC.--EQUITY GROWTH FUND
SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 1994 (CONCLUDED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
REAL ESTATE 50,000 Capstone Capital Trust, Inc......... $ 900,000 $ 787,500 0.5%
50,000 First Industrial Realty Trust, 1,180,200 975,000 0.6
Inc.................................
45,250 National Health Investors, Inc...... 1,250,000 1,182,156 0.7
3,330,200 2,944,656 1.8
- ------------------------------------------------------------------------------------------------------------------------
RESTAURANTS 75,000 + Outback Steakhouse, Inc............. 2,053,125 1,734,375 1.0
- ------------------------------------------------------------------------------------------------------------------------
RETAIL APPAREL 55,000 + Tommy Hilfiger Corp................. 2,258,269 2,481,875 1.5
- ------------------------------------------------------------------------------------------------------------------------
RETAIL SPECIALTY 200,000 MicroAge Inc........................ 3,065,251 2,325,000 1.4
110,000 + Tech Data Corp...................... 1,722,527 1,856,250 1.1
4,787,778 4,181,250 2.5
- ------------------------------------------------------------------------------------------------------------------------
SEMICONDUCTOR 60,000 + Electroglas Inc..................... 2,043,125 1,995,000 1.2
PRODUCTION EQUIPMENT 50,000 + Ultratech Stepper Inc............... 1,095,001 1,900,000 1.1
30,000 + Veeco Instruments, Inc.............. 330,000 285,000 0.2
3,468,126 4,180,000 2.5
- ------------------------------------------------------------------------------------------------------------------------
SEMICONDUCTORS 170,000 Dallas Semiconductor Corp........... 2,926,559 2,826,250 1.7
50,000 + Tower Semiconductor Ltd............. 585,820 525,000 0.3
3,512,379 3,351,250 2.0
- ------------------------------------------------------------------------------------------------------------------------
SHIPPING 50,000 + Kirby Corp.......................... 896,850 987,500 0.6
- ------------------------------------------------------------------------------------------------------------------------
STEEL 90,000 Birmingham Steel Corp............... 2,511,223 1,800,000 1.1
75,000 Reliance Steel & Aluminum Co........ 1,087,500 946,875 0.6
3,598,723 2,746,875 1.7
- ------------------------------------------------------------------------------------------------------------------------
TEXTILES 55,000 + Galey & Lord, Inc................... 761,875 790,625 0.5
100,000 + Mohawk Industries,Inc............... 1,790,625 1,225,000 0.7
2,552,500 2,015,625 1.2
- ------------------------------------------------------------------------------------------------------------------------
TOTAL COMMON STOCKS 149,096,016 151,740,144 89.2
- ------------------------------------------------------------------------------------------------------------------------
FACE AMOUNT SHORT-TERM SECURITIES
- ------------------------------------------------------------------------------------------------------------------------
COMMERCIAL PAPER* $8,000,000 Daimler-Benz AG, 5.64% due 7,993,778 7,993,778 4.7
1/04/1995...........................
2,204,000 General Electric Capital Corp.,
5.80% due 1/03/1995................. 2,202,580 2,202,580 1.3
10,196,358 10,196,358 6.0
- ------------------------------------------------------------------------------------------------------------------------
US GOVERNMENT & 8,000,000 Federal Home Loan Mortgage Corp.,
AGENCY OBLIGATIONS* 5.54% due 1/05/1995................. 7,992,613 7,992,613 4.7
- ------------------------------------------------------------------------------------------------------------------------
TOTAL SHORT-TERM SECURITIES 18,188,971 18,188,971 10.7
- ------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS................... $167,284,987 169,929,115 99.9
OTHER ASSETS LESS LIABILITIES....... 114,508 0.1
NET ASSETS.......................... $170,043,623 100.0%
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
* 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 Fund.
+ Non-income producing security.
See Notes to Financial Statements.
35
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH VARIABLE SERIES FUNDS, INC.--FLEXIBLE STRATEGY FUND
SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE PERCENT OF
INDUSTRY HELD US STOCKS & WARRANTS COST (NOTE 1A) NET ASSETS
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ALUMINUM 16,000 Aluminum Co. of America.......... $ 1,358,485 $ 1,386,000 0.5%
- ------------------------------------------------------------------------------------------------------------------------
APPLIANCES 180,000 Singer Co. N.V. (f).............. 5,613,949 5,377,500 2.0
205,000 Sunbeam-Oster Inc................ 4,195,820 5,278,750 1.9
------------ ------------ ----------
9,809,769 10,656,250 3.9
- ------------------------------------------------------------------------------------------------------------------------
AUTOMOTIVE 65,000 Consorcio G Grupo Dina S.A. de
C.V. (ADR) (a) (f)............. 1,273,435 617,500 0.2
- ------------------------------------------------------------------------------------------------------------------------
BANKING 50,000 BankAmerica Corp................. 2,267,371 1,975,000 0.7
70,000 Bank of New York, Inc............ 1,973,776 2,030,000 0.7
40,000 + Bank of New York, Inc. (Warrants)
(b)............................ 300,938 385,000 0.1
110,000 Espirito Santo Financial Holdings
S.A. (ADR) (a) (f)............. 1,638,728 1,471,250 0.5
50,000 Grupo Financiero Serfin S.A. de
C.V. (ADR) (a) (f)............. 1,284,529 375,000 0.1
------------ ------------ ----------
7,465,342 6,236,250 2.1
- ------------------------------------------------------------------------------------------------------------------------
BEVERAGES 8,000 Panamerican Beverage, Inc. (Class
A) (f)......................... 287,834 253,000 0.1
- ------------------------------------------------------------------------------------------------------------------------
CHEMICALS 40,000 du Pont (E.I.) de Nemours &
Co............................. 2,355,629 2,250,000 0.8
75,000 Eastman Chemical Co.............. 3,860,673 3,787,500 1.4
45,000 + IMC Fertilizer Group, Inc........ 1,826,535 1,946,250 0.7
40,000 Rohm and Haas Co................. 2,347,779 2,285,000 0.8
------------ ------------ ----------
10,390,616 10,268,750 3.7
- ------------------------------------------------------------------------------------------------------------------------
COMMUNICATION EQUIPMENT 110,000 + ADC Telecommunication Inc........ 3,872,648 5,445,000 2.0
100,000 DSC Communications Corp.......... 2,363,175 3,600,000 1.3
30,000 Motorola, Inc.................... 1,560,200 1,736,250 0.6
30,000 Tellabs, Inc..................... 831,315 1,665,000 0.6
------------ ------------ ----------
8,627,338 12,446,250 4.5
- ------------------------------------------------------------------------------------------------------------------------
COMPUTER EQUIPMENT 11,000 International Business Machines
Corp........................... 781,579 808,500 0.3
85,000 + Solectron Corp................... 1,824,067 2,337,500 0.9
------------ ------------ ----------
2,605,646 3,146,000 1.2
- ------------------------------------------------------------------------------------------------------------------------
COMPUTER SERVICES 165,000 Computer Sciences Corp........... 5,588,070 8,415,000 3.1
25,000 General Motors Corp. (Class E)... 981,560 962,500 0.3
------------ ------------ ----------
6,569,630 9,377,500 3.4
- ------------------------------------------------------------------------------------------------------------------------
CONSTRUCTION 63,000 Empresas ICA Sociedad
Controladora, S.A. de C.V.
(ADR) (a) (f).................. 1,407,219 976,500 0.4
- ------------------------------------------------------------------------------------------------------------------------
CONSUMER--MISCELLANEOUS 50,000 Duracell International, Inc...... 2,093,659 2,168,750 0.8
- ------------------------------------------------------------------------------------------------------------------------
CONSUMER SERVICES 55,000 Block (H&R), Inc................. 2,478,297 2,041,875 0.7
- ------------------------------------------------------------------------------------------------------------------------
ELECTRICAL EQUIPMENT 75,000 Grainger (W.W), Inc.............. 4,651,873 4,331,250 1.6
- ------------------------------------------------------------------------------------------------------------------------
ENERGY RELATED 100,000 + California Energy Co., Inc....... 1,837,585 1,562,500 0.6
- ------------------------------------------------------------------------------------------------------------------------
ENVIRONMENTAL CONTROL 350,000 + Wheelabrator Technologies,
Inc............................ 5,888,869 5,162,500 1.9
- ------------------------------------------------------------------------------------------------------------------------
HEALTHCARE 175,000 + Humana Inc....................... 3,164,634 3,959,375 1.4
80,000 + Physician Corp. of America....... 1,759,763 1,620,000 0.6
15,000 + Vivra Inc........................ 278,914 420,000 0.2
------------ ------------ ----------
5,203,311 5,999,375 2.2
- ------------------------------------------------------------------------------------------------------------------------
HEALTH AND
PERSONAL CARE 45,000 Huntington International Holdings
PLC (ADR) (a) (f).............. 461,978 118,125 0.0
- ------------------------------------------------------------------------------------------------------------------------
HOUSEHOLD PRODUCTS 100,000 Procter & Gamble Co.............. 5,564,714 6,200,000 2.3
- ------------------------------------------------------------------------------------------------------------------------
INSURANCE 35,000 ITT Corp......................... 3,004,477 3,101,875 1.1
- ------------------------------------------------------------------------------------------------------------------------
MACHINERY 45,000 Siebe PLC (f).................... 392,986 391,813 0.1
- ------------------------------------------------------------------------------------------------------------------------
MULTI--INDUSTRY 60,000 + Allied Signal Inc................ 2,155,828 2,040,000 0.7
- ------------------------------------------------------------------------------------------------------------------------
OFFICE EQUIPMENT 190,000 Danka Business Systems Inc. PLC
(ADR) (a) (f).................. 3,055,107 4,061,250 1.5
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
36
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH VARIABLE SERIES FUNDS, INC.--FLEXIBLE STRATEGY FUND
SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 1994 (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE PERCENT OF
INDUSTRY HELD US STOCKS & WARRANTS COST (NOTE 1A) NET ASSETS
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
OIL--INTEGRATED 15,110 British Petroleum PLC (ADR) (a)
(f)............................ $ 1,147,919 $ 1,206,911 0.4%
50,000 Mobil Oil Corp................... 3,922,826 4,212,500 1.5
50,000 Phillips Petroleum Co............ 1,699,244 1,637,500 0.6
30,000 Royal Dutch Petroleum Co.
(ADR) (a) (f).................. 3,013,607 3,225,000 1.2
------------ ------------ ----------
9,783,596 10,281,911 3.7
- ------------------------------------------------------------------------------------------------------------------------
PACKAGING 40,000 + Crown Cork & Seal Co., Inc....... 1,456,240 1,510,000 0.5
- ------------------------------------------------------------------------------------------------------------------------
PHARMACEUTICALS 25,000 American Home Products Corp...... 1,557,695 1,568,750 0.6
100,000 Merck & Co., Inc................. 3,637,356 3,812,500 1.4
------------ ------------ ----------
5,195,051 5,381,250 2.0
- ------------------------------------------------------------------------------------------------------------------------
PHOTOGRAPHY 40,000 Eastman Kodak Co................. 1,969,398 1,910,000 0.7
- ------------------------------------------------------------------------------------------------------------------------
RAILROADS 105,000 + Southern Pacific Rail Corp....... 2,146,353 1,903,125 0.7
- ------------------------------------------------------------------------------------------------------------------------
RETAIL 30,000 Phillips-Van Heusen Corp......... 853,660 457,500 0.2
25,000 + Revco D.S., Inc.................. 579,095 590,625 0.2
------------ ------------ ----------
1,432,755 1,048,125 0.4
- ------------------------------------------------------------------------------------------------------------------------
SOAP 7,000 Unilever Capital Corp. (ADR) (a)
(f)............................ 812,101 815,500 0.3
- ------------------------------------------------------------------------------------------------------------------------
TIRE & RUBBER 25,000 Bandag, Inc. (Class A)........... 1,354,227 1,337,500 0.5
35,000 Cooper Tire & Rubber Co.......... 949,285 826,875 0.3
------------ ------------ ----------
2,303,512 2,164,375 0.8
- ------------------------------------------------------------------------------------------------------------------------
UTILITIES--COMMUNICATIONS 15,500 + ALC Communications Corp.......... 464,664 482,438 0.2
60,000 GTE Corp......................... 1,920,691 1,822,500 0.7
164,734 LDDS Communications Inc.......... 3,522,400 3,191,721 1.2
130,000 + MCI Communications Corp.......... 3,498,756 2,388,750 0.9
70,000 + Southwestern Bell Corp........... 2,980,278 2,826,250 1.0
45,000 Telefonos de Mexico, S.A. de C.V.
(ADR) (a) (f).................. 2,814,912 1,845,000 0.7
------------ ------------ ----------
15,201,701 12,556,659 4.7
- ------------------------------------------------------------------------------------------------------------------------
TOTAL US STOCKS & WARRANTS 126,884,705 130,114,258 47.3
- ------------------------------------------------------------------------------------------------------------------------
<CAPTION>
COUNTRY FOREIGN STOCKS++++
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
AUSTRALIA 69,633 National Australia Bank Ltd.
(2)............................ 577,474 557,068 0.2
80,000 News Corp. Ltd. (ADR) (a) (19)... 1,626,298 1,250,000 0.5
40,000 News Corp. Ltd. (Preferred)
(ADR) (a) (19)................. 499,721 555,000 0.2
475 Pacific Dunlop, Ltd. (20)........ 1,371 1,263 0.0
------------ ------------ ----------
2,704,864 2,363,331 0.9
- ------------------------------------------------------------------------------------------------------------------------
CANADA 30,000 Hudson Bay Co. (23).............. 740,755 534,721 0.2
50,000 Semi-Tech Corp. Receipts,
Inc. (d) (11).................. 536,117 196,064 0.1
55,000 Nova Corp. (5)................... 577,810 508,750 0.2
------------ ------------ ----------
1,854,682 1,239,535 0.5
- ------------------------------------------------------------------------------------------------------------------------
CHILE 15,200 Banco O'Higgins (Sponsored)
(ADR) (a) (2).................. 221,987 260,300 0.1
20,000 Cristalerias de Chile S.A. (ADR)
(a) (26)....................... 391,925 315,000 0.1
25,000 ++ Distribuidora Chilectra
Metropolitana S.A. (ADR) (a)
(9)............................ 795,208 1,225,000 0.4
14,000 Telex Chile S.A. (25)............ 276,514 148,750 0.1
------------ ------------ ----------
1,685,634 1,949,050 0.7
- ------------------------------------------------------------------------------------------------------------------------
DENMARK 42,000 Tele Danmark A/S (ADR) (a)
(25)........................... 1,020,702 1,071,000 0.4
- ------------------------------------------------------------------------------------------------------------------------
FRANCE 4,646 Compagnie Generale des Eaux
(Ordinary) (28)................ 485,421 452,227 0.2
7,800 + Eramet (29)...................... 488,521 504,689 0.2
------------ ------------ ----------
973,942 956,916 0.4
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
37
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH VARIABLE SERIES FUNDS, INC.--FLEXIBLE STRATEGY FUND
SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 1994 (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE PERCENT OF
COUNTRY HELD FOREIGN STOCKS++++ COST (NOTE 1A) NET ASSETS
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
HONG KONG 91,641 HSBC Holdings PLC (2)............ $ 766,003 $ 989,145 0.4%
245,000 Hutchison Whampoa Co. (20)....... 810,025 991,275 0.4
200,000 Johnson Electric Holdings Ltd.
(11)........................... 408,481 458,894 0.2
700,000 Shanghai Petrochemical Co., Ltd.
(21)........................... 233,787 199,069 0.1
------------ ------------ ----------
2,218,296 2,638,383 1.1
- ------------------------------------------------------------------------------------------------------------------------
INDONESIA 980 P.T. Indonesia Satellite (ADR)
(a) (25)....................... 31,409 35,035 0.0
- ------------------------------------------------------------------------------------------------------------------------
ITALY 25,000 Istituto Mobiliare Italiano
S.p.A. (ADR) (a) (2)........... 552,180 459,375 0.2
- ------------------------------------------------------------------------------------------------------------------------
JAPAN 20,000 Fujitsu, Ltd. (7)................ 220,570 203,015 0.1
45,000 Hitachi, Ltd. (10)............... 447,643 447,286 0.2
6,000 Kyocera Corp. (11)............... 444,404 445,628 0.2
115,000 Mitsubishi Electric Corp. (10)... 805,387 817,136 0.3
15,000 NEC Corp. (11)................... 192,442 171,859 0.1
10,000 TDK Corp. (11)................... 471,824 485,427 0.2
------------ ------------ ----------
2,582,270 2,570,351 1.1
- ------------------------------------------------------------------------------------------------------------------------
MEXICO 210,000 Cifra, S.A. de C.V. (23)......... 551,720 406,286 0.1
96,400 ++ Grupo Carso, S.A. de C.V. (ADR)
(a) (20)....................... 1,124,115 1,458,050 0.5
311,500 Telefonos de Mexico, S.A. de C.V.
(Telemex) (Class L) (25)....... 579,168 648,429 0.2
------------ ------------ ----------
2,255,003 2,512,765 0.8
- ------------------------------------------------------------------------------------------------------------------------
NORWAY 30,000 Norsk Hydro A.S. (ADR) (a) (5)... 1,143,208 1,173,750 0.4
- ------------------------------------------------------------------------------------------------------------------------
SWEDEN 5,000 Electrolux A.B. 'B' Free (10).... 254,436 254,187 0.1
- ------------------------------------------------------------------------------------------------------------------------
UNITED KINGDOM 15,000 Hanson PLC (ADR) (a) (20)........ 332,006 270,000 0.1
50,000 L.M. Ericsson Telephone Co.
(25)........................... 2,895,870 2,756,250 1.0
40,000 Reuters Holdings PLC (ADR) (a)
(4)............................ 1,467,162 1,755,000 0.6
------------ ------------ ----------
4,695,038 4,781,250 1.7
- ------------------------------------------------------------------------------------------------------------------------
TOTAL FOREIGN STOCKS 21,971,664 22,004,928 8.3
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
FACE
INDUSTRY AMOUNT* CORPORATE & FOREIGN BONDS++++
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
FOREIGN--AUSTRALIA Queensland Treasury Corp., Global
Notes (15):
A$ 7,300,000 8.00% due 5/14/1997............... 5,356,175 5,405,042 2.0
1,925,000 8.00% due 7/14/1999............... 1,436,763 1,371,506 0.5
------------ ------------ ----------
6,792,938 6,776,548 2.5
- ------------------------------------------------------------------------------------------------------------------------
FOREIGN--CANADA US$ 5,000,000 Hydro-Electric Quebec, 6.35% due
1/15/2002 (15).................. 5,000,000 4,462,500 1.6
- ------------------------------------------------------------------------------------------------------------------------
FOREIGN--GERMANY DM 13,700,000 Bundes Obligation, 6.375% due
5/20/1998 (15).................. 8,366,515 8,664,843 3.2
1,450,000 Deutschland Republic, 8.00% due
7/22/2002 (15).................. 950,668 953,647 0.3
------------ ------------ ----------
9,317,183 9,618,490 3.5
- ------------------------------------------------------------------------------------------------------------------------
FOREIGN--ITALY US$ 500,000 Republic of Italy, 8.75% due
2/08/2001 (15).................. 537,305 502,188 0.2
- ------------------------------------------------------------------------------------------------------------------------
FOREIGN-- Pound 625,000 UK Treasury Gilt (15):
UNITED KINGDOM Sterling 7.25% due 3/30/1998............. 942,775 942,659 0.3
1,800,000 8.00% due 6/10/2003............... 2,729,309 2,687,551 1.0
------------ ------------ ----------
3,672,084 3,630,210 1.3
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
38
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH VARIABLE SERIES FUNDS, INC.--FLEXIBLE STRATEGY FUND
SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 1994 (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE CORPORATE & FOREIGN BONDS++++ VALUE PERCENT OF
INDUSTRY AMOUNT* COST (NOTE 1A) NET ASSETS
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
US--FINANCIAL US$ 1,000,000 Ford Motor Credit Co., 7.125%
SERVICES due 12/01/1997............. $ 995,000 $ 966,564 0.4%
- ---------------------------------------------------------------------------------------------------------
US--INDUSTRIAL 1,000,000 International Business
Machines Corp., 6.375% due
6/15/2000.................. 1,000,000 915,314 0.3
- ---------------------------------------------------------------------------------------------------------
US-- 5,000,000 Chesapeake & Potomac Telecom
tELECOMMUNICATIONS Co., 6.125% due
7/15/2005.................. 4,503,300 4,243,750 1.5
- ---------------------------------------------------------------------------------------------------------
TOTAL CORPORATE & FOREIGN
BONDS 31,817,810 31,115,564 11.3
- ---------------------------------------------------------------------------------------------------------
US GOVERNMENT & AGENCY
OBLIGATIONS
- ---------------------------------------------------------------------------------------------------------
FEDERAL Federal National Mortgage
AGENCY Association:
OBLIGATIONS
US$ 5,000,000 7.85% due 9/10/2004.......... 4,992,969 4,791,405 1.7
5,000,000 8.00% due 1/01/2020.......... 4,774,219 4,790,625 1.7
2,000,000 Series 93D, 5.85% due
2/25/2006.................. 1,996,250 1,819,375 0.7
------------ ------------ ----------
11,763,438 11,401,405 4.1
- ---------------------------------------------------------------------------------------------------------
GOVERNMENT
OBLIGATIONS US Treasury Notes:
1,000,000 8.625% due 8/15/1997....... 1,027,344 1,018,750 0.4
6,000,000 7.50% due11/15/2001.......... 6,143,336 5,891,250 2.1
5,000,000 6.25% due 2/15/2003.......... 4,990,469 4,523,440 1.6
10,000,000 7.25% due 8/15/2004.......... 10,103,125 9,604,690 3.5
US Treasury STRIPS++:
3,000,000 7.77% due 5/15/2000 (e)...... 2,219,543 1,994,094 0.7
10,000,000 7.92% due 11/15/2004 (e)..... 4,661,724 4,634,520 1.7
------------ ------------ ----------
29,145,541 27,666,744 10.0
- ---------------------------------------------------------------------------------------------------------
MORTGAGE- Government National Mortgage
BACKED Association (c):
SECURITIES 1,184,942 9.00% due 11/15/2019....... 1,174,190 1,195,311 0.4
541,884 9.00% due 11/15/2019......... 538,159 546,626 0.2
------------ ------------ ----------
1,712,349 1,741,937 0.6
- ---------------------------------------------------------------------------------------------------------
TOTAL US GOVERNMENT & AGENCY
OBLIGATIONS 42,621,328 40,810,086 14.7
- ---------------------------------------------------------------------------------------------------------
</TABLE>
39
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH VARIABLE SERIES FUNDS, INC.--FLEXIBLE STRATEGY FUND
SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 1994 (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE VALUE PERCENT OF
AMOUNT* SHORT-TERM SECURITIES COST (NOTE 1A) NET ASSETS
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
COMMERCIAL US$ 14,000,000 Corporate Asset Funding Co.
PAPER** Inc., 5.83% due 1/27/1995.. $ 13,938,785 $ 13,938,785 5.1%
7,789,000 General Electric Capital
Corp.,
5.80% due 1/03/1995........ 7,785,235 7,785,235 2.8
14,000,000 PHH Corp., 6.00% due
1/17/1995.................. 13,960,333 13,960,333 5.1
------------ ------------ ----------
35,684,353 35,684,353 13.0
- ---------------------------------------------------------------------------------------------------------
US
GOVERNMENT
&
AGENCY 14,000,000 Federal Home Loan Mortgage
OBLIGATIONS** Association, 5.54% due
1/05/1995.................. 13,989,228 13,989,228 5.1
- ---------------------------------------------------------------------------------------------------------
TOTAL SHORT-TERM SECURITIES 49,673,581 49,673,581 18.1
- ---------------------------------------------------------------------------------------------------------
SHARES PREMIUMS
COVERED ISSUE RECEIVED
- ---------------------------------------------------------------------------------------------------------
CALL 10,000 ADC Telecommunications Inc.,
OPTIONS expiring January 1995 at
WRITTEN US$50...................... (13,271) (11,250) 0.0
6,000 ITT Corp., expiring January
1995 at US$90.............. (7,257) (6,750) 0.0
- ---------------------------------------------------------------------------------------------------------
TOTAL OPTIONS WRITTEN (20,528) (18,000) 0.0
- ---------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS, NET OF
OPTIONS WRITTEN............ $272,948,560 273,700,417 99.7
------------
------------
OTHER ASSETS LESS
LIABILITIES................ 797,849 0.3
------------ ----------
NET ASSETS................... $274,498,266 100.0%
------------ ----------
------------ ----------
- ---------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<C> <S>
(a) American Depositary Receipts (ADR).
(b) Warrants entitle the Fund 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.
(c) US Government Agency Mortgage-Backed Obligations are subject to principal paydowns as a result of prepayments or
refinancings of the underlying mortgage investments. As a result, the average life may be substantially less than the
original maturity.
(d) Receipts evidence payment by the Fund of 40% of the purchase price of International Semi-Tech Corp. Receipts. The
Fund is obligated to pay the remaining 60%, approximately $498,000, over the next two years.
(e) Represents the yield-to-maturity on this zero coupon issue.
(f) Consistent with 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) the country in which the issuer derives a
significant proportion (at least 50%) of its revenue 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 issuers are situated.
* Denominated in US dollars unless otherwise indicated.
** 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 Fund.
+ Non-income producing security.
</TABLE>
40
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH VARIABLE SERIES FUNDS, INC.--FLEXIBLE STRATEGY FUND
SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 1994 (CONCLUDED)
- --------------------------------------------------------------------------------
<TABLE>
<C> <S>
++ Restricted securities as to resale. The value of the Fund's investment in restricted securities was approximately
$2,683,000, representing 0.98% of net assets.
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ACQUISITION VALUE
ISSUE DATES COST (NOTE 1A)
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Distribuidora Chilectra Metropolitana S.A. (ADR)................................. 2/12/1992 $ 795,208 $ 1,225,000
Grupo Carso, S.A. de C.V. (ADR).................................................. 1/24/1992
1,124,115 1,458,050
- -----------------------------------------------------------------------------------------------------------------------
TOTAL............................................................................
$ 1,919,323 $ 2,683,050
------------ ------------
------------ ------------
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<C> <S>
++ Separate Trading of Registered Interest and Principal of Securities (STRIPS).
++++ Corresponding industry groups for foreign securities:
</TABLE>
<TABLE>
<C> <S>
(1) Automotive
(2) Banking
(3) Beverages
(4) Business Services
(5) Chemicals
(6) Communications Equipment
(7) Computers
(8) Construction
(9) Electric Utilities
(10) Electrical Equipment
(11) Electronics
(12) Energy
(13) Financial Services
(14) Food Chains
(15) Government Entities
(16) Health and Personal Care
(17) Insurance
(18) Machinery
(19) Media Publishing
(20) Multi-Industry
(21) Petroleum
(22) Real Estate
(23) Retail Stores
(24) Soap
(25) Telecommunications
(26) Containers
(27) Packaging
(28) Utilities-Water
(29) Metals
</TABLE>
See Notes to Financial Statements.
41
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH VARIABLE SERIES FUNDS, INC.--GLOBAL STRATEGY FOCUS FUND
SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE PERCENT OF
INDUSTRY HELD US STOCKS COST (NOTE 1A) NET ASSETS
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
AEROSPACE 61,500 United Technologies Corp........... $ 3,820,923 $ 3,866,812 0.7%
- ------------------------------------------------------------------------------------------------------------------------
BANKING 46,900 Morgan (J.P.) & Co................. 3,144,878 2,626,400 0.5
- ------------------------------------------------------------------------------------------------------------------------
BUILDING--RELATED 75,700 Stanley Works Co................... 3,136,707 2,706,275 0.5
- ------------------------------------------------------------------------------------------------------------------------
CHEMICALS 54,050 Eastman Chemical Co................ 2,354,380 2,729,525 0.5
94,500 Nalco Chemical Co.................. 3,283,332 3,165,750 0.6
------------ ------------ ----------
5,637,712 5,895,275 1.1
- ------------------------------------------------------------------------------------------------------------------------
COMPUTER TECHNOLOGY 30,400 Hewlett-Packard Co................. 2,362,976 3,036,200 0.6
- ------------------------------------------------------------------------------------------------------------------------
CONSUMER--SERVICES 112,000 Kelly Services, Inc. (Class A)..... 3,154,750 3,052,000 0.6
- ------------------------------------------------------------------------------------------------------------------------
ENERGY RELATED 134,000 + California Energy Co., Inc......... 2,383,346 2,093,750 0.4
- ------------------------------------------------------------------------------------------------------------------------
ENVIRONMENTAL CONTROL 201,800 + Wheelabrator Technologies, Inc..... 3,633,140 2,976,550 0.6
- ------------------------------------------------------------------------------------------------------------------------
FOODS 172,275 Archer-Daniels-Midland Co.......... 2,567,582 3,553,172 0.7
- ------------------------------------------------------------------------------------------------------------------------
HEALTH CARE 120,000 + Humana Inc......................... 2,876,654 2,715,000 0.5
- ------------------------------------------------------------------------------------------------------------------------
MACHINERY 78,900 Ingersoll-Rand Co.................. 2,785,025 2,485,350 0.5
- ------------------------------------------------------------------------------------------------------------------------
MISCELLANEOUS--
MANUFACTURING 162,200 Keystone International, Inc........ 3,719,883 2,757,400 0.5
- ------------------------------------------------------------------------------------------------------------------------
NATURAL GAS 119,000 Westcoast Energy Inc............... 1,925,615 1,889,125 0.4
- ------------------------------------------------------------------------------------------------------------------------
OFFICE--RELATED 84,500 Pitney Bowes, Inc.................. 3,323,892 2,682,875 0.5
- ------------------------------------------------------------------------------------------------------------------------
OIL--INTEGRATED 96,700 Phillips Petroleum Co.............. 2,816,185 3,166,925 0.6
- ------------------------------------------------------------------------------------------------------------------------
PETROLEUM & SERVICE 142,900 Dresser Industries, Inc............ 3,146,100 2,697,238 0.5
EQUIPMENT 50,200 Schlumberger Ltd................... 2,972,633 2,528,825 0.5
------------ ------------ ----------
6,118,733 5,226,063 1.0
- ------------------------------------------------------------------------------------------------------------------------
PHARMACEUTICALS 112,000 Abbott Laboratories................ 3,152,867 3,654,000 0.7
105,000 Merck & Co., Inc................... 3,539,150 4,003,125 0.8
------------ ------------ ----------
6,692,017 7,657,125 1.5
- ------------------------------------------------------------------------------------------------------------------------
PHOTOGRAPHY 57,200 Eastman Kodak Co................... 2,529,035 2,731,300 0.5
- ------------------------------------------------------------------------------------------------------------------------
PRINTING/PUBLISHING 70,800 Gannett Co., Inc................... 3,634,477 3,770,100 0.7
- ------------------------------------------------------------------------------------------------------------------------
50,100 American Telephone & Telegraph
TELECOMMUNICATIONS Co............................... 2,740,599 2,517,525 0.5
50,300 Bell Atlantic Corp................. 2,829,968 2,502,425 0.5
98,000 Comsat Corp........................ 2,582,928 1,825,250 0.4
------------ ------------ ----------
8,153,495 6,845,200 1.4
- ------------------------------------------------------------------------------------------------------------------------
TOTAL US STOCKS 74,417,025 71,732,897 13.8
- ------------------------------------------------------------------------------------------------------------------------
COUNTRY FOREIGN STOCKS & WARRANTS++
- ------------------------------------------------------------------------------------------------------------------------
ARGENTINA 127,520 Banco de Galicia S.A. (ADR)* (3)... 2,868,834 2,183,780 0.4
117,000 + Banco Frances del Rio de la Plata
S.A. (Class A) (ADR)* (3)........ 3,272,016 2,500,875 0.5
100,000 Yacimientos Petroliferos Fiscales
S.A. (Sponsored) (ADR)* (21)..... 2,345,882 2,137,500 0.4
------------ ------------ ----------
8,486,732 6,822,155 1.3
- ------------------------------------------------------------------------------------------------------------------------
AUSTRALIA 621,000 CSR Ltd. (Ordinary) (18)........... 1,970,236 2,142,226 0.4
251,000 National Bank of Australia (3)..... 1,939,280 2,008,016 0.4
837,600 Pacific Dunlop, Ltd. (18).......... 2,815,855 2,227,125 0.4
------------ ------------ ----------
6,725,371 6,377,367 1.2
- ------------------------------------------------------------------------------------------------------------------------
CANADA 172,100 Canadian Pacific Ltd. (18)......... 2,710,067 2,581,500 0.5
65,000 Imperial Oil Ltd. (9).............. 2,297,743 2,143,341 0.4
20,000 Imperial Oil Ltd. (ADR)* (9)....... 592,938 660,000 0.1
77,400 Northern Telecommunications, Ltd.
(27)............................. 2,137,422 2,583,225 0.5
217,000 Thomson Corp. (7).................. 2,673,122 2,668,794 0.5
------------ ------------ ----------
10,411,292 10,636,860 2.0
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
42
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH VARIABLE SERIES FUNDS, INC.--GLOBAL STRATEGY FOCUS FUND
SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 1994 (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE PERCENT OF
COUNTRY HELD FOREIGN STOCKS & WARRANTS++ COST (NOTE 1A) NET ASSETS
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
150,000 + Banco O'Higgins (Sponsored) (ADR)*
CHILE (3).............................. $ 2,377,482 $ 2,568,750 0.5%
- ------------------------------------------------------------------------------------------------------------------------
CHINA 8,000,000 Shanghai Petrochemical Company,
Ltd. (9)......................... 2,557,317 2,275,078 0.4
- ------------------------------------------------------------------------------------------------------------------------
FRANCE 33,900 Alactel Alsthom (8)................ 3,830,275 2,899,175 0.6
22,100 Compagnie de Saint Gobain (14)..... 2,366,194 2,544,899 0.5
23,800 + Compagnie General des Eaux (31).... 2,592,063 2,316,617 0.4
36,766 + Schneider S.A (11)................. 2,409,589 2,440,953 0.5
1,966 + Schneider S.A. (Warrants) (a)
(11)............................. 16,314 14,011 0.0
40,300 TOTAL S.A. (21).................... 2,118,813 2,344,535 0.5
------------ ------------ ----------
13,333,248 12,560,190 2.5
- ------------------------------------------------------------------------------------------------------------------------
GERMANY 10,250 + Mannesmann AG (17)................. 2,195,390 2,794,251 0.5
9,750 Preussag AG (18)................... 2,569,641 2,834,302 0.5
10,700 RWE AG (Rheinisch Westfalisches)
(31)............................. 2,883,098 3,003,327 0.6
6,150 Siemens AG (12).................... 2,507,770 2,578,391 0.5
16,600 Thyssen AG (Ordinary) (17)......... 2,353,011 3,168,798 0.6
------------ ------------ ----------
12,508,910 14,379,069 2.7
- ------------------------------------------------------------------------------------------------------------------------
536,400 China Light & Power Co., Ltd.
HONG KONG (31)............................. 2,653,976 2,288,159 0.4
350,000 Sun Hung Kai Properties, Ltd.
(24)............................. 2,393,488 2,090,228 0.4
397,000 Swire Pacific, Ltd. (Class A)
(8).............................. 2,402,225 2,473,552 0.5
------------ ------------ ----------
7,449,689 6,851,939 1.3
- ------------------------------------------------------------------------------------------------------------------------
65,180 PT Indonesia Satellite (ADR)*
INDONESIA (27)............................. 2,516,111 2,330,185 0.5
- ------------------------------------------------------------------------------------------------------------------------
ITALY 680,000 Daniel & Co. (17).................. 2,451,794 2,433,667 0.5
660,000 Italcementi S.p.A. (4)............. 2,340,308 2,288,782 0.4
------------ ------------ ----------
4,792,102 4,722,449 0.9
- ------------------------------------------------------------------------------------------------------------------------
JAPAN 229,000 Asahi Glass Co., Ltd. (4).......... 2,536,504 2,830,854 0.5
68,000 Bandai Co. (29).................... 2,243,363 2,904,523 0.6
165,000 Canon, Inc. (12)................... 2,315,252 2,802,513 0.5
165,000 Dai Nippon Printing Co., Ltd.
(23)............................. 2,681,206 2,819,095 0.5
305,000 Hitachi Cable, Ltd. (8)............ 2,258,069 2,544,221 0.5
57,000 Ito-Yokado Co., Ltd. (25).......... 2,773,666 3,053,367 0.6
281,000 Kamigumi Co. (26).................. 3,327,164 2,993,568 0.6
146,000 Kandenko Co., Ltd. (4)............. 3,108,742 2,465,126 0.5
117,000 Kansai Electric Power Co. (32)..... 3,171,203 2,822,111 0.5
320,000 + Komatsu Ltd. (17).................. 2,495,093 2,894,472 0.6
242,000 Maeda Corp. (4).................... 2,444,979 2,529,447 0.5
407,000 Makino Milling Machine Co. (17).... 2,527,613 3,673,226 0.7
162,000 Makita Electric Works, Ltd. (12)... 2,941,609 2,930,653 0.6
166,000 Matsushita Electric Industries,
Ltd. (12)........................ 2,324,954 2,736,080 0.5
430,000 Mitsubishi Electric Co. (11)....... 2,778,342 3,055,377 0.6
386,000 Mitsubishi Heavy Industry, Ltd.
(8).............................. 2,363,424 2,948,342 0.6
415,000 Nippon Fire and Marine Insurance
Co., Ltd. (16)................... 2,923,392 2,886,231 0.6
364,000 Nippon Oil Co., Ltd. (21).......... 2,469,057 2,425,447 0.5
310,000 Okumura Corp. (4).................. 2,626,893 2,321,106 0.5
294,000 Sekisui Chemical Co., Ltd. (9)..... 2,969,066 2,925,226 0.6
170,000 Sharp Corp. (12)................... 2,504,542 3,075,377 0.6
119,000 Shikoku Electric Power Co. (31).... 3,095,822 2,834,472 0.5
285,000 + Sumitomo Corp. (30)................ 2,414,459 2,921,608 0.6
225,000 Tokio Marine and Fire Insurance
Co., Ltd. (16)................... 2,906,154 2,758,794 0.5
103,000 Tokyo Electric Power Co., Inc.
(31)............................. 3,203,802 2,877,789 0.6
144,000 Tokyo Style Co. (10)............... 2,477,721 2,445,829 0.5
400,000 + Toray Industries Ltd. (28)......... 2,827,073 2,914,573 0.6
172,000 Toto Ltd. (4)...................... 3,106,946 2,817,688 0.5
87,000 Toyo Seikan Kaisha Corp. (20)...... 2,447,671 2,902,915 0.6
</TABLE>
43
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH VARIABLE SERIES FUNDS, INC.--GLOBAL STRATEGY FOCUS FUND
SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 1994 (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE PERCENT OF
COUNTRY HELD FOREIGN STOCKS & WARRANTS++ COST (NOTE 1A) NET ASSETS
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
JAPAN 141,000 Toyota Motor Corp. (1)............. $ 2,461,767 $ 2,975,879 0.6%
(CONCLUDED) 151,000 Yamazaki Banking Ltd. (3).......... 2,993,580 3,035,176 0.6
------------ ------------ ----------
83,719,128 88,121,085 17.3
- ------------------------------------------------------------------------------------------------------------------------
MALAYSIA 400,000 Hong Leong Industries BHD (5)...... 2,162,754 2,068,560 0.4
800,000 UMW Holdings BHD (2)............... 2,055,479 2,131,244 0.4
------------ ------------ ----------
4,218,233 4,199,804 0.8
- ------------------------------------------------------------------------------------------------------------------------
MEXICO 458,813 Cementos Mexicanos, S.A. de C.V.
(Class B) (8).................... 2,998,578 2,439,200 0.5
1,399,000 + Cifra, S.A. de C.V. (Class C)
(25)............................. 3,373,615 2,706,637 0.5
246,000 Consorcio G Grupo Dina, S.A. de
C.V. (ADR)* (6).................. 3,781,859 2,337,000 0.5
130,000 Empresas ICA Sociedad Controladora,
S.A. de C.V. (ADR)* (32)......... 3,203,355 2,015,000 0.4
71,600 Telefonos de Mexico, S.A. de C.V.
(Telmex) (ADR)* (27)............. 3,705,673 2,935,600 0.6
------------ ------------ ----------
17,063,080 12,433,437 2.5
- ------------------------------------------------------------------------------------------------------------------------
466 ABN Amro Holdings N.V. (Preferred)
NETHERLANDS (3).............................. 15,383 15,540 0.0
23,000 Royal Dutch Petroleum Co. N.V.
(ADR)* (21)...................... 2,269,122 2,472,500 0.5
29,400 Ver Ner Utigevers (23)............. 2,383,457 3,056,704 0.6
------------ ------------ ----------
4,667,962 5,544,744 1.1
- ------------------------------------------------------------------------------------------------------------------------
16,200 Hafslund Nycomed, Inc. (ADR)*
NORWAY (22)............................. 328,622 334,125 0.1
147,200 Hafslund Nycomed, Inc. (Class B)
(22)............................. 2,587,241 3,072,114 0.6
72,200 Kvaerner, Inc. (Class B) (8)....... 2,934,292 3,270,160 0.6
------------ ------------ ----------
5,850,155 6,676,399 1.3
- ------------------------------------------------------------------------------------------------------------------------
PORTUGAL 169,200 Banco Commercial Portugues (ADR)*
(3).............................. 2,313,645 2,136,150 0.4
- ------------------------------------------------------------------------------------------------------------------------
SINGAPORE 333,000 Jurong Shipyards Ltd. (4).......... 2,607,046 2,560,659 0.5
1,875,000 Neptune Orient Lines Ltd. (26)..... 2,302,432 2,574,665 0.5
------------ ------------ ----------
4,909,478 5,135,324 1.0
- ------------------------------------------------------------------------------------------------------------------------
82,400 Repsol S.A. (Sponsored) (ADR)*
SPAIN (21)............................. 2,379,669 2,245,400 0.4
76,700 Telefonica Nacional de Espana S.A.
(ADR)* (27)...................... 2,873,677 2,694,087 0.5
------------ ------------ ----------
5,253,346 4,939,487 0.9
- ------------------------------------------------------------------------------------------------------------------------
SWEDEN 167,000 SKF AB 'B' Free (8)................ 2,580,434 2,758,637 0.5
- ------------------------------------------------------------------------------------------------------------------------
SWITZERLAND 3,300 BBC Brown Boveri & Cie (8)......... 2,297,018 2,844,436 0.6
3,340 Holderbank Financiere Glarus AG
(8).............................. 1,776,158 2,531,503 0.5
3,890 Sulzer Gebrueder AG (17)........... 2,142,764 2,695,480 0.5
------------ ------------ ----------
6,215,940 8,071,419 1.6
- ------------------------------------------------------------------------------------------------------------------------
THAILAND 374,000 M.D.X. Corp., Ltd. (24)............ 1,925,555 1,266,786 0.2
- ------------------------------------------------------------------------------------------------------------------------
UNITED KINGDOM 295,600 Allied Lyons PLC (13).............. 2,648,038 2,499,712 0.5
553,000 British Gas PLC (19)............... 2,565,455 2,701,914 0.5
345,000 British Telecommunications PLC
(27)............................. 2,219,411 2,039,519 0.4
294,000 GKN PLC (6)........................ 2,318,167 2,704,873 0.5
585,000 General Electric PLC (11).......... 2,809,289 2,510,141 0.5
101,100 Grand Metropolitan PLC (Sponsored)
(ADR)* (13)...................... 2,697,289 2,527,500 0.5
667,000 Hanson PLC (10).................... 2,615,796 2,412,846 0.5
1,052,000 Hillsdown Holdings PLC (10)........ 2,595,494 2,965,378 0.6
207,000 Imperial Chemical Industries PLC
(9).............................. 2,402,001 2,426,353 0.5
737,000 Lucas Industries PLC (6)........... 1,866,692 2,377,533 0.5
------------ ------------ ----------
24,737,632 25,165,769 5.0
- ------------------------------------------------------------------------------------------------------------------------
TOTAL FOREIGN STOCKS & WARRANTS 234,612,842 235,973,083 45.9
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
44
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH VARIABLE SERIES FUNDS, INC.--GLOBAL STRATEGY FOCUS FUND
SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 1994 (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE PERCENT OF
COUNTRY FACE AMOUNT** FOREIGN BONDS++ COST (NOTE 1A) NET ASSETS
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
AUSTRALIA Queensland Treasury Corp. (15):
A$ 4,125,000 8.00% due 7/14/1999................ $ 2,922,527 $ 2,938,942 0.6%
6,500,000 8.00% due 5/14/2003................ 4,820,875 4,394,136 0.9
------------ ------------ ----------
7,743,402 7,333,078 1.5
- ------------------------------------------------------------------------------------------------------------------------
CANADA C$ 15,800,000 Government of Canada,
7.25% due 6/01/2003 (15)......... 11,839,688 10,036,244 1.9
- ------------------------------------------------------------------------------------------------------------------------
GERMANY DM 24,000,000 Bundes Obligation,
6.375% due 5/20/1998 (15)........ 15,218,569 15,179,287 2.9
- ------------------------------------------------------------------------------------------------------------------------
ITALY Buoni Poliennali del Tesoro (15):
Lit 6,000,000,000 8.50% due 1/01/1997................ 3,753,480 3,513,513 0.7
7,100,000,000 10.00% due 8/01/2003............... 4,508,125 3,912,864 0.8
------------ ------------ ----------
8,261,605 7,426,377 1.5
- ------------------------------------------------------------------------------------------------------------------------
UNITED KINGDOM UK Gilt (15):
Pound Sterling 8,190,000 7.25% due 3/30/1998................ 12,651,800 12,352,598 2.4
75,000 9.75% due 8/27/2002................ 149,409 123,066 0.0
3,000,000 8.00% due 6/10/2003................ 4,822,692 4,479,252 0.9
------------ ------------ ----------
17,623,901 16,954,916 3.3
- ------------------------------------------------------------------------------------------------------------------------
TOTAL FOREIGN BONDS 60,687,165 56,929,902 11.1
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
US GOVERNMENT OBLIGATIONS
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
US Treasury Notes:
US$ 300,000 7.875% due 8/15/2001............. 304,953 300,516 0.1
700,000 7.50% due 11/15/2001............. 714,297 687,312 0.1
1,400,000 6.375% due 8/15/2002............. 1,383,906 1,281,657 0.2
7,175,000 6.25% due 2/15/2003.............. 7,371,895 6,491,136 1.3
19,000,000 5.75% due 8/15/2003.............. 19,162,891 16,515,161 3.2
12,000,000 5.875% due 2/15/2004............. 11,185,391 10,470,000 2.0
19,000,000 7.25% due 5/15/2004.............. 19,248,281 18,254,839 3.5
40,000,000 7.25% due 8/15/2004.............. 40,330,469 38,418,760 7.5
35,000,000 7.875% due 11/15/2004............ 34,979,219 35,114,835 6.8
- ------------------------------------------------------------------------------------------------------------------------
TOTAL US GOVERNMENT OBLIGATIONS.. 134,681,302 127,534,216 24.7
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
45
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH VARIABLE SERIES FUNDS, INC.--GLOBAL STRATEGY FOCUS FUND
SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 1994 (CONCLUDED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE VALUE PERCENT OF
AMOUNT** SHORT-TERM SECURITIES COST (NOTE 1A) NET ASSETS
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
COMMERCIAL PAPER*** $ 1,023,000 General Electric Capital Corp.,
5.80% due 1/03/1995............ $ 1,022,505 $ 1,022,505 0.2%
19,000,000 Penney (J.C.) Funding Corp.,
5.75% due 1/17/1995............ 18,948,410 18,948,410 3.7
- ------------------------------------------------------------------------------------------------------------------------
TOTAL SHORT-TERM SECURITIES 19,970,915 19,970,915 3.9
- ------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS...................................... $ 524,369,249 512,141,013 99.4
-------------
-------------
UNREALIZED APPRECIATION ON FORWARD FOREIGN
EXCHANGE CONTRACTS+++.................................. 559,659 0.1
OTHER ASSETS LESS LIABILITIES.......................... 2,706,644 0.5
------------- ----------
NET ASSETS............................................. $ 515,407,316 100.0%
------------- ----------
------------- ----------
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<C> <S>
* 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 Fund.
(a) Warrants entitle the Fund 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.
+ Non-income producing security.
++ Corresponding industry groups for foreign stocks and bonds:
</TABLE>
<TABLE>
<C> <S> <C> <C>
(1) Automobiles (17) Machinery
(2) Automotive & Equipment (18) Multi-Industry
(3) Banking (19) Natural Gas
(4) Building & Construction (20) Packaging
(5) Building Materials (21) Petroleum
(6) Business & Public Service (22) Pharmaceutical
(7) Business Publishing (23) Printing & Publishing
(8) Capital Goods (24) Real Estate
(9) Chemicals (25) Retail Stores
(10) Diversified (26) Shipping
(11) Electrical Equipment (27) Telecommunications
(12) Electronics (28) Textiles
(13) Food (29) Toys
(14) Glass (30) Trading
(15) Government (Bonds) (31) Utilities
(16) Insurance (32) Utilities--Electric
</TABLE>
<TABLE>
<C> <S>
+++ Forward foreign exchange contracts as of December 31, 1994 were as follows:
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
UNREALIZED
EXPIRATION APPRECIATION
FOREIGN CURRENCY SOLD DATE (NOTE 1B)
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Yen 5,235,000,000................................................................... July 1995 $559,659
- ------------------------------------------------------------------------------------------------------------------------
TOTAL UNREALIZED APPRECIATION ON FORWARD
FOREIGN EXCHANGE CONTRACTS (US$ COMMITMENT--$54,492,984)........................... $559,659
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
46
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH VARIABLE SERIES FUNDS, INC.--GLOBAL UTILITY FOCUS FUND
SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 1994 (IN US DOLLARS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE PERCENT OF NET
COUNTRY INDUSTRY HELD COMMON STOCKS & WARRANTS COST (NOTE 1A) ASSETS
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ARGENTINA TELECOMMUNICATIONS 7,900 Central Costanera S.A.
(ADR)* (b)................ $ 261,847 $ 205,400 0.2%
25,600 Telecom Argentina Stet S.A.
(ADR)*(b)................. 1,160,819 1,324,800 1.0
22,400 Telefonica de Argentina S.A.
(ADR)*.................... 1,173,168 1,187,200 0.9
------------ ------------ ----------
2,595,834 2,717,400 2.1
TOTAL COMMON STOCKS IN
ARGENTINA 2,595,834 2,717,400 2.1
AUSTRALIA UTILITIES--GAS 434,496 Australian Gas & Light Co.,
Ltd....................... 1,238,060 1,465,173 1.2
TOTAL COMMON STOCKS IN
AUSTRALIA 1,238,060 1,465,173 1.2
AUSTRIA UTILITIES--GAS 11,300 Energie Versorgung
Niederoesterreich AG
(EVN)..................... 1,388,213 1,468,326 1.2
TOTAL COMMON STOCKS IN
AUSTRIA 1,388,213 1,468,326 1.2
BRAZIL UTILITIES--ELECTRIC 140,000 Companhia Energetica de
Minas Gerais S.A. (CEMIG)
(ADR)* (b)................ 3,360,000 3,290,000 2.6
TOTAL COMMON STOCKS IN
BRAZIL.................... 3,360,000 3,290,000 2.6
CANADA TELECOMMUNICATIONS 56,000 BC Telecom, Inc............. 1,052,989 958,220 0.8
UTILITIES--GAS 70,100 Transcanada Pipeline Co.,
Ltd. (ADR)*............... 1,045,275 849,963 0.7
93,000 Westcoast Energy Inc........ 1,594,099 1,476,375 1.2
------------ ------------ ----------
2,639,374 2,326,338 1.9
TOTAL COMMON STOCKS IN
CANADA 3,692,363 3,284,558 2.7
CHILE TELECOMMUNICATIONS 14,400 Compana de Telefonos de
Chile S.A. (ADR)*......... 1,254,995 1,134,000 0.9
UTILITIES--ELECTRIC 20,000 Chilgener S.A. (ADR)*....... 460,000 492,500 0.4
35,100 Distribuidora Chilectra
Metropolitana S.A. (ADR)*
(b)....................... 1,098,338 1,719,900 1.4
48,300 Enersis S.A. (ADR)*......... 1,026,061 1,340,325 1.1
------------ ------------ ----------
2,584,399 3,552,725 2.9
TOTAL COMMON STOCKS IN
CHILE..................... 3,839,394 4,686,725 3.8
DENMARK TELECOMMUNICATIONS 77,000 Tele Danmark A/S (ADR)*..... 1,826,433 1,963,500 1.6
TOTAL COMMON STOCKS IN
DENMARK 1,826,433 1,963,500 1.6
FRANCE UTILITIES--WATER 16,409 Compagnie Generale des
Eaux...................... 1,872,761 1,597,200 1.3
7,111 Lyonnaise des Eaux-Dumez.... 722,326 625,480 0.5
------------ ------------ ----------
2,595,087 2,222,680 1.8
TOTAL COMMON STOCKS IN
FRANCE 2,595,087 2,222,680 1.8
GERMANY UTILITIES--ELECTRIC 4,000 Veba AG..................... 1,305,397 1,395,349 1.1
TOTAL COMMON STOCKS IN
GERMANY 1,305,397 1,395,349 1.1
HONG KONG TELECOMMUNICATIONS 894,000 Hong Kong
Telecommunications, Ltd.
PLC....................... 1,646,544 1,704,563 1.4
UTILITIES--ELECTRIC 355,200 China Light & Power Co.,
Ltd....................... 2,385,389 1,515,202 1.2
253,500 Hong Kong Electric Holdings,
Ltd....................... 681,517 693,062 0.5
------------ ------------ ----------
3,066,906 2,208,264 1.7
UTILITIES--GAS 394,800 The Hong Kong & China Gas
Co., Ltd. 755,615 637,927 0.5
32,900 + The Hong Kong & China Gas
Co., Ltd. (Warrants)
(a)....................... 0 6,252 0.0
------------ ------------ ----------
755,615 644,179 0.5
TOTAL COMMON STOCKS &
WARRANTS IN HONG KONG 5,469,065 4,557,006 3.6
</TABLE>
47
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH VARIABLE SERIES FUNDS, INC.--GLOBAL UTILITY FOCUS FUND
SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 1994 (CONTINUED) (IN US DOLLARS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE PERCENT OF NET
COUNTRY INDUSTRY HELD COMMON STOCKS & WARRANTS COST (NOTE 1A) ASSETS
<S> <C> <C> <C> <C> <C> <C> <C> <C>
INDIA UTILITIES-ELECTRIC 4,500 CESC Ltd. (GDR)** (b)....... $ 40,950 $ 32,625 0.0%
7,500 CESC Ltd. (Units)........... 400,050 277,500 0.2
1,000 + Tata Electric Companies
(GDR)** (b)............... 710,000 440,000 0.3
------------ ------------ ----------
1,151,000 750,125 0.5
TOTAL COMMON STOCKS IN INDIA 1,151,000 750,125 0.5
INDONESIA TELECOMMUNICATIONS 1,110 P.T. Indonesian Satellite
Corp. (ADR)*.............. 35,575 39,683 0.0
TOTAL COMMON STOCKS IN
INDONESIA 35,575 39,683 0.0
ITALY TELECOMMUNICATIONS 761,900 Societa Finanziara
Telefonica S.p.A.
(STET).................... 1,629,934 1,807,667 1.4
729,600 Telecom Italia S.p.A........ 1,635,193 1,899,859 1.5
------------ ------------ ----------
3,265,127 3,707,526 2.9
UTILITIES--GAS 513,400 Italgas Torino.............. 1,581,576 1,414,495 1.1
TOTAL COMMON STOCKS IN
ITALY..................... 4,846,703 5,122,021 4.0
KOREA UTILITIES--ELECTRIC 40,800 Korea Electric Power Corp.
(ADR)*.................... 821,100 872,100 0.7
TOTAL COMMON STOCKS IN
KOREA..................... 821,100 872,100 0.7
MALAYSIA TELECOMMUNICATIONS 139,000 Telekom Malaysia BHD........ 962,438 942,096 0.7
TOTAL COMMON STOCKS IN
MALAYSIA 962,438 942,096 0.7
MEXICO TELECOMMUNICATIONS 29,000 Telefonos de Mexico, S.A. de
C.V. (Telemex) (ADR)*..... 1,706,306 1,189,000 0.9
TOTAL COMMON STOCKS IN
MEXICO 1,706,306 1,189,000 0.9
NEW ZEALAND TELECOMMUNICATIONS 36,800 Telecom Corporation of New
Zealand Ltd. (ADR)*....... 1,680,030 1,890,600 1.5
TOTAL COMMON STOCKS IN NEW
ZEALAND 1,680,030 1,890,600 1.5
PHILIPPINES TELECOMMUNICATIONS 21,800 Philippine Long Distance
Telephone Co. (ADR)*...... 1,270,791 1,201,725 1.0
UTILITIES--ELECTRIC 38,000 Manila Electric Co.
(MERALCO) 'B'............. 518,117 521,721 0.4
TOTAL COMMON STOCKS IN THE
PHILIPPINES 1,788,908 1,723,446 1.4
SPAIN TELECOMMUNICATIONS 28,700 Telefonica de Espana S.A.
(ADR)*.................... 1,065,201 1,008,088 0.8
UTILITIES--ELECTRIC 36,400 Empresa Nacional de
Electricidad, S.A.
(Endesa) (ADR)*........... 1,634,684 1,474,200 1.2
15,000 Hidrocantabrico S.A......... 503,484 410,490 0.3
131,000 Iberdrola I S.A............. 879,896 808,605 0.6
------------ ------------ ----------
3,018,064 2,693,295 2.1
TOTAL COMMON STOCKS IN
SPAIN..................... 4,083,265 3,701,383 2.9
THAILAND TELECOMMUNICATIONS 2,000 TelecomAsia Corp. Public
Co., Ltd. (ADR)* (b)...... 43,740 56,000 0.0
UTILITIES--ELECTRIC 68,000 + Electricity Generating
Public Co., Ltd. (b)...... 60,715 113,808 0.1
TOTAL COMMON STOCKS IN
THAILAND 104,455 169,808 0.1
</TABLE>
48
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH VARIABLE SERIES FUNDS, INC.--GLOBAL UTILITY FOCUS FUND
SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 1994 (CONTINUED) (IN US DOLLARS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE PERCENT OF NET
COUNTRY INDUSTRY HELD COMMON STOCKS & WARRANTS COST (NOTE 1A) ASSETS
<S> <C> <C> <C> <C> <C> <C> <C> <C>
UNITED KINGDOM TELECOMMUNICATIONS 10,000 British Telecommunications
PLC (ADR)*................ $ 741,450 $ 601,250 0.5%
57,000 British Telecommunications
PLC (Ordinary)............ 406,712 336,964 0.3
87,000 Vodafone Group PLC (ADR)*... 2,549,289 2,925,375 2.3
------------ ------------ ----------
3,697,451 3,863,589 3.1
UTILITIES--ELECTRIC 86,000 London Electricity.......... 860,944 1,003,336 0.8
90,000 Powergen PLC................ 658,010 755,438 0.6
------------ ------------ ----------
1,518,954 1,758,774 1.4
TOTAL COMMON STOCKS IN THE
UNITED KINGDOM 5,216,405 5,622,363 4.5
UNITED
STATES TELECOMMUNICATIONS 36,400 AirTouch Communications,
Inc....................... 879,157 1,060,150 0.8
45,800 Ameritech Corp.............. 1,864,458 1,849,175 1.5
31,800 Bell Atlantic Corp.......... 1,872,160 1,582,050 1.3
33,700 BellSouth Corp.............. 2,020,584 1,824,013 1.4
53,500 GTE Corp.................... 1,866,628 1,625,063 1.3
150,000 NYNEX Corp.................. 5,893,598 5,512,500 4.4
163,600 Pacific Telesis Group....... 4,956,976 4,662,600 3.7
45,300 Southwestern Bell Corp...... 1,921,580 1,828,988 1.4
66,900 U S West Inc................ 2,970,861 2,383,313 1.9
------------ ------------ ----------
24,246,002 22,327,852 17.7
UTILITIES--ELECTRIC 65,600 Allegheny Power System,
Inc....................... 1,689,846 1,426,800 1.1
47,500 Boston Edison Co............ 1,386,299 1,134,063 0.9
84,192 CINergy Corp................ 2,052,668 1,967,988 1.6
42,300 Central & SouthWest Corp.... 1,326,363 957,037 0.8
49,300 Consolidated Edison Co. of
New York.................. 1,597,050 1,269,475 1.0
31,500 Detroit Edison Co........... 989,953 822,937 0.7
26,400 Dominion Resources, Inc..... 1,242,516 943,800 0.7
61,000 Duke Power Co............... 2,452,906 2,325,625 1.8
54,300 Entergy Corp................ 1,905,240 1,187,812 0.9
85,200 General Public Utilities
Corp...................... 2,559,840 2,236,500 1.8
73,100 Houston Industries, Inc..... 3,215,466 2,604,187 2.1
56,000 NIPSCO Industries, Inc...... 1,787,890 1,666,000 1.3
50,700 New York State Electric &
Gas Corp.................. 1,537,761 963,300 0.8
42,300 Northeast Utilities Co...... 1,096,216 914,737 0.7
93,800 PECO Energy Co.............. 2,719,313 2,298,100 1.8
72,800 PacifiCorp.................. 1,401,416 1,319,500 1.0
35,307 Pennsylvania Power & Light
Co........................ 958,939 670,833 0.5
44,000 Public Service Co. of
Colorado.................. 1,312,146 1,292,500 1.0
39,900 Rochester Gas & Electric
Corp...................... 1,077,409 832,912 0.7
64,000 SCEcorp..................... 1,220,732 936,000 0.7
86,200 Southern Co................. 1,846,654 1,724,000 1.4
40,000 Texas Utilities Co.......... 1,615,997 1,280,000 1.0
40,600 Western Resources Co........ 1,393,851 1,162,175 0.9
------------ ------------ ----------
38,386,471 31,936,281 25.2
UTILITIES--GAS 33,000 The Brooklyn Union Gas
Co........................ 855,855 734,250 0.6
52,000 The Coastal Corp............ 1,509,758 1,339,000 1.1
24,800 El Paso Natural Gas Co...... 895,148 756,400 0.6
65,700 Enron Corp.................. 2,152,889 2,003,850 1.6
55,100 NICOR Inc................... 1,539,128 1,253,525 1.0
26,100 National Fuel Gas Company... 788,314 665,550 0.5
25,000 New Jersey Resources
Corp...................... 656,623 565,625 0.4
53,500 Questar Corp................ 1,908,628 1,471,250 1.2
72,200 Sonat, Inc.................. 2,342,585 2,021,600 1.6
24,900 Washington Gas Light Co..... 1,046,197 834,150 0.7
78,600 Williams Co., Inc........... 2,298,643 1,974,825 1.6
------------ ------------ ----------
15,993,768 13,620,025 10.9
TOTAL COMMON STOCKS IN THE
UNITED STATES 78,626,241 67,884,158 53.8
- ------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN COMMON
STOCKS & WARRANTS 128,332,272 116,957,500 92.7
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
49
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH VARIABLE SERIES FUNDS, INC.--GLOBAL UTILITY FOCUS FUND
SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 1994 (CONCLUDED) (IN US DOLLARS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE VALUE PERCENT OF NET
COUNTRY INDUSTRY AMOUNT FIXED-INCOME SECURITIES COST (NOTE 1A) ASSETS
<S> <C> <C> <C> <C> <C> <C> <C> <C>
AUSTRALIA TELECOMMUNICATIONS $1,040,000 Telstra Corp. Ltd., 6.50%
due 7/31/2003 (b)......... $ 1,084,062 $ 912,194 0.7%
TOTAL FIXED-INCOME
SECURITIES IN AUSTRALIA 1,084,062 912,194 0.7
- ------------------------------------------------------------------------------------------------------------------------
KOREA UTILITIES--ELECTRIC 1,000,000 Korea Electric Power Corp.,
6.375% due 12/01/2003..... 985,510 848,890 0.7
TOTAL FIXED-INCOME
SECURITIES IN KOREA 985,510 848,890 0.7
- ------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN FIXED-
INCOME SECURITIES 2,069,572 1,761,084 1.4
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SHORT-TERM SECURITIES
<S> <C> <C> <C> <C> <C> <C> <C> <C>
COMMERCIAL PAPER*** 6,000,000 Ford Motor Credit Company,
5.75% due 1/17/1995......... 5,982,900 5,982,900 4.7
1,491,000 General Electric Capital
Corp., 5.80% due
1/03/1995................... 1,490,039 1,490,039 1.2
------------ ------------ ----------
7,472,939 7,472,939 5.9
TOTAL INVESTMENTS IN
SHORT-TERM SECURITIES 7,472,939 7,472,939 5.9
- ------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS............. $137,874,783 126,191,523 100.0
------------
------------
OTHER ASSETS LESS
LIABILITIES................. 51,284 0.0
------------ ----------
NET ASSETS.................... $126,242,807 100.0%
------------ ----------
------------ ----------
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
* American Depositary Receipt (ADR).
** Global Depositary Receipt (GDR).
*** Commercial Paper is traded on a discount basis; the interest rates shown are the discount rates paid at the time of
purchase by the Fund.
(a) Warrants entitle the Fund 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) Restricted securities as to resale. The value of the Fund's investment in restricted securities was approximately
$8,095,000, representing 6.41% of the net assets.
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
VALUE
ISSUE ACQUISITION DATES COST (NOTE 1A)
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
CESC Ltd. (GDR)................................................. 5/17/1994 $ 40,950 $ 32,625
Companhia Energetica de Minas Gerais S.A. (CEMIG) (ADR)......... 9/22/1994 3,360,000 3,290,000
Central Costanera S.A. (ADR).................................... 12/17/1993 261,847 205,400
Distribuidora Chilectra Metropolitana S.A. (ADR)................ 8/06/1993-12/21/1993 1,098,338 1,719,900
Electricity Generating Public Co., Ltd.......................... 10/27/1994 60,715 113,808
Tata Electric Companies (GDR)................................... 2/22/1994 710,000 440,000
Telecom Argentina Stet S.A. (ADR)............................... 10/05/1993-12/22/1993 1,160,819 1,324,800
TelecomAsia Corp. Public Co., Ltd. (ADR)........................ 11/15/1993 43,740 56,000
Telstra Corp. Ltd., 6.50% due 7/31/2003......................... 7/26/1993-9/29/1993 1,084,062 912,194
- ------------------------------------------------------------------------------------------------------------------------
TOTAL........................................................... $ 7,820,471 $ 8,094,727
----------- ------------
----------- ------------
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
+ Non-income producing security.
See Notes to Financial Statements.
50
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH VARIABLE SERIES FUNDS, INC.--HIGH CURRENT INCOME FUND
SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
S&P MOODY'S FACE VALUE
INDUSTRY RATINGS RATINGS AMOUNT ISSUE COST (NOTE 1A)
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
AIRLINES--2.5% Delta Air Lines Inc.:
BB+ Baa3 $ 1,000,000 9.30% due 1/02/2010................. $ 987,700 $ 935,216
BB+ Baa3 500,000 10.50% due 4/30/2016................ 506,875 490,755
United Air Lines, Inc.:
BB+ Baa2 1,000,000 9.35% due 4/07/2016................. 1,016,260 883,500
BB+ Ba2 995,000 9.21% due 1/21/2017................. 991,938 857,849
BB B1 4,000,000 USAir, Inc., 10.375% due
3/01/2013......................... 3,935,000 3,260,000
------------- -------------
7,437,773 6,427,320
- ------------------------------------------------------------------------------------------------------------------------
AUTOMOBILE PARTS--0.8% B B3 2,000,000 SPX Corp., 11.75% due 6/01/2002..... 2,043,750 1,990,000
- ------------------------------------------------------------------------------------------------------------------------
BROADCASTING & BB- Ba3 750,000 Heritage Media Services Inc., 11.00%
PUBLISHING--3.3% due 6/15/2002..................... 789,063 761,250
B B1 1,000,000 K-III Communications Corp., 10.25%
due 6/01/2004..................... 995,000 955,000
B B3 1,200,000 The Katz Corp., 12.75% due
11/15/2002........................ 1,238,625 1,248,000
B Caa 3,800,000 NWCG Holding Corp., 13.50%** due
6/15/1999++....................... 2,122,486 1,938,000
BB- B3 2,500,000 SCI Television Inc., 11.00% due
6/30/2005(a)...................... 2,560,000 2,525,000
B+ B3 1,000,000 Sinclair Broadcast Group Inc.,
10.00% due 12/15/2003............. 1,000,000 930,000
------------- -------------
8,705,174 8,357,250
- ------------------------------------------------------------------------------------------------------------------------
BUILDING & B B2 2,500,000 Del Webb Corp., 9.00% due
CONSTRUCTION--0.9% 2/15/2006......................... 2,497,500 1,900,000
B B1 250,000 K Hovnanian Enterprises Inc., 11.25%
due 4/15/2002..................... 247,813 208,750
BB- Ba3 250,000 Ryland Group Inc., 10.50% due
7/15/2002......................... 246,260 223,750
------------- -------------
2,991,573 2,332,500
- ------------------------------------------------------------------------------------------------------------------------
BUILDING MATERIALS--1.0% B+ B3 2,650,000 Pacific Lumber Co., 10.50% due
3/01/2003......................... 2,606,938 2,464,500
- ------------------------------------------------------------------------------------------------------------------------
BUILDING PRODUCTS--1.1% B+ B1 250,000 American Standard Inc., 9.25% due
12/01/2016........................ 251,875 228,750
B Ba3 1,750,000 Inter-City Products Corp., 9.75% due
3/01/2000......................... 1,718,750 1,631,875
B B2 1,000,000 USG Corp., 8.75% due 3/01/2017...... 904,375 850,000
------------- -------------
2,875,000 2,710,625
- ------------------------------------------------------------------------------------------------------------------------
CAPITAL GOODS--0.6% B+ B1 1,660,000 Essex Group, Inc., 10.00% due
5/01/2003......................... 1,668,925 1,560,400
- ------------------------------------------------------------------------------------------------------------------------
CELLULAR TELEPHONES--2.4% CCC Caa 3,750,000 Dial Page, Inc., 12.25% due
2/15/2000......................... 3,850,563 3,750,000
CCC+ B3 3,000,000 USA Mobile Communications Holdings,
Inc., 9.50% due 2/01/2004......... 2,710,000 2,430,000
------------- -------------
6,560,563 6,180,000
- ------------------------------------------------------------------------------------------------------------------------
CHEMICALS--5.3% B B2 4,600,000 Agricultural Minerals & Chemicals
Co., L.P., 10.75% due 9/30/2003... 4,623,188 4,646,000
B+ Ba3 7,310,000 G-I Holdings Inc., 11.38%** due
10/01/1998........................ 4,731,660 4,513,925
B B2 2,000,000 Harris Chemical North America,
11.95%** due 7/15/2001............ 1,654,408 1,645,000
B B3 3,000,000 Laroche Industries Inc., 13.00% due
8/15/2004......................... 2,991,250 2,760,000
------------- -------------
14,000,506 13,564,925
- ------------------------------------------------------------------------------------------------------------------------
COMMUNICATIONS--2.9% CCC- Caa 3,670,000 American Telecasting, Inc., 12.50%**
due 6/15/2004..................... 2,137,449 1,578,100
BB- B2 4,000,000 Telefonica de Argentina, S.A.,
11.875% due 11/01/2004............ 3,917,780 3,600,000
B+ B3 4,000,000 Videotron Holdings PLC, 11.817%**
due 7/01/2004..................... 2,328,826 2,100,000
------------- -------------
8,384,055 7,278,100
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
51
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH VARIABLE SERIES FUNDS, INC.--HIGH CURRENT INCOME FUND
SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 1994 (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
S&P MOODY'S FACE VALUE
INDUSTRY RATINGS RATINGS AMOUNT ISSUE COST (NOTE 1A)
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
CONGLOMERATES--6.6% NR* B3 $ 2,000,000 Astrum International Corp., 11.50%
due 6/08/2003..................... $ 2,017,500 $ 2,010,000
B+ B1 1,750,000 Coltec Industries, Inc., 10.25% due
4/01/2002......................... 1,866,250 1,715,000
Foamex L.P.:
B+ B1 530,000 9.50% due 6/01/2000................. 517,413 484,950
B+ B1 1,450,000 11.25% due 10/01/2002............... 1,455,125 1,377,500
2,000,000 JB Poindexter & Co., 12.50% due
5/15/2004......................... 2,000,000 1,860,000
B+ B3 3,000,000 Jordan Industries Inc., 10.375% due
8/01/2003......................... 2,993,000 2,670,000
NR* B3 890,000 MacAndrews & Forbes Group, Inc.,
13.00% due 3/01/1999.............. 868,373 881,100
Sequa Corp.:
BB B2 750,000 9.625% due 10/15/1999............... 740,625 712,500
B+ B3 2,500,000 9.375% due 12/15/2003............... 2,512,813 2,200,000
BB- B1 3,000,000 Sherritt Gordon, Ltd., 9.75% due
4/01/2003......................... 2,985,938 2,880,000
------------- -------------
17,957,037 16,791,050
- ------------------------------------------------------------------------------------------------------------------------
CONSUMER--
PRODUCTS--3.3% B NR* 4,950,000 Coleman Holdings, Inc., 11.28%** due
5/27/1998......................... 3,395,934 3,328,875
NR* Caa 750,000 Formica Corp., 14.843% due
9/15/2005 (a)..................... 750,000 874,232
Liggett Group, Inc.:
NR* NR* 500,000 11.50% due 2/01/1999................ 451,760 350,000
NR* NR* 9,000 16.50% due 2/01/1999++.............. 9,000 7,740
B- Caa 4,000,000 Polymer Group Inc., 12.25% due
7/15/2002++....................... 3,967,500 3,890,000
------------- -------------
8,574,194 8,450,847
- ------------------------------------------------------------------------------------------------------------------------
CONTAINERS--4.5% B B2 3,500,000 Anchor Glass Container Co., 9.875%
due 12/15/2008.................... 3,353,750 3,010,000
Owens-Illinois, Inc.:
B+ B2 2,000,000 10.00% due 8/01/2002................ 2,000,000 1,955,000
BB Ba3 1,500,000 11.00% due 12/01/2003............... 1,624,688 1,556,250
B- B3 3,660,000 Silgan Holdings, Inc., 13.25%** due
12/15/2002........................ 3,121,703 3,074,400
B+ B1 1,000,000 Stone Consolidated Corp., 10.25% due
12/15/2000........................ 1,000,000 985,000
B+ Ba3 1,000,000 Sweetheart Cup Co., 9.625% due
9/01/2000......................... 1,000,000 945,000
------------- -------------
12,100,141 11,525,650
- ------------------------------------------------------------------------------------------------------------------------
CONVERTIBLE BONDS+--0.5% B- B3 400,000 Farm Fresh Inc., 7.50% due
3/01/2010 (1)..................... 208,000 246,705
B- B3 200,000 MEDIQ Inc., 7.25% due 6/01/2006
(2)............................... 138,000 126,000
B B2 1,200,000 OHM Corp., 8.00% due 10/01/2006
(3)............................... 1,070,500 936,000
B B2 250,000 UNC Inc., 7.50% due 3/31/2006 (4)... 145,625 196,250
------------- -------------
1,562,125 1,504,955
- ------------------------------------------------------------------------------------------------------------------------
COSMETICS--0.7% B B2 2,000,000 Revlon Group Inc., 9.375% due
4/01/2001......................... 1,738,721 1,790,000
- ------------------------------------------------------------------------------------------------------------------------
ENERGY--9.0% B+ B1 4,000,000 Clark Oil & Refining Corp., 10.54%**
due 2/15/2000..................... 2,366,264 2,280,000
NR* NR* 1,500,000 Consolidated Hydro, Inc., 12.00%**
due 7/15/2003..................... 999,961 870,000
BB- B1 2,925,000 Energy Ventures, Inc., 10.25% due
3/15/2004++....................... 2,901,875 2,749,500
BB B1 1,580,000 Gulf Canada Resources, Ltd., 9.00%
due 8/15/1999..................... 1,517,450 1,501,000
Maxus Energy Corp.:
BB- B1 2,500,000 9.375% due 11/01/2003............... 2,352,500 2,112,500
BB- B1 250,000 11.50% due 11/15/2015............... 246,562 230,000
</TABLE>
52
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH VARIABLE SERIES FUNDS, INC.--HIGH CURRENT INCOME FUND
SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 1994 (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
S&P MOODY'S FACE VALUE
INDUSTRY RATINGS RATINGS AMOUNT ISSUE COST (NOTE 1A)
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ENERGY (CONCLUDED) BB- Ba3 $ 2,000,000 Noble Drilling Corp., 9.25% due
10/01/2003........................ $ 1,952,500 $ 1,890,000
BB- Ba3 2,500,000 Seagull Energy Corp., 8.625% due
8/01/2005......................... 2,493,750 2,131,250
NR* B3 250,000 Tesoro Petroleum Corp., 12.75% due
3/15/2001......................... 230,216 250,000
BB- B1 3,000,000 Trans Texas Gas Corp., 10.50% due
9/01/2000......................... 2,985,625 2,865,000
B+ B1 4,000,000 Triton Energy Corp., 9.68%** due
11/01/1997........................ 3,012,395 2,940,000
BB- B1 4,500,000 Yacimientos Petroliferos Fiscales
S.A.-ADR, 8.00% due 2/15/2004
(e)............................... 3,694,375 3,240,000
------------- -------------
24,753,473 23,059,250
- ------------------------------------------------------------------------------------------------------------------------
ENTERTAINMENT--2.4% B B3 500,000 AMC Entertainment, Inc., 12.625% due
8/01/2002......................... 509,742 528,750
B+ B1 250,000 Cinemark USA, Inc., 12.00% due
6/01/2002......................... 250,000 260,000
B Caa 4,500,000 Marvel Holdings, Inc., 9.125% (d)
due 2/15/1998..................... 3,999,375 3,915,000
CCC+ B2 3,415,000 Spectra Vision Inc., 11.50%** due
10/01/2001........................ 2,836,700 1,468,450
------------- -------------
7,595,817 6,172,200
- ------------------------------------------------------------------------------------------------------------------------
FINANCIAL SERVICES--1.8% B+ B1 1,500,000 Lomas Mortgage USA Inc., 10.25% due
10/01/2002........................ 1,561,250 1,245,000
B- B3 250,000 Pioneer Finance Corp., 13.50% due
12/01/1998........................ 264,062 180,000
BB- B1 3,500,000 Reliance Group Holdings Inc., 9.75%
due 11/15/2003.................... 3,432,500 3,062,500
------------- -------------
5,257,812 4,487,500
- ------------------------------------------------------------------------------------------------------------------------
FOOD & BEVERAGE--6.5% B+ B1 3,500,000 Canandaigua Wine Inc., 8.75% due
12/15/2003........................ 3,115,000 3,185,000
BB- B1 3,000,000 Chiquita Brands International Inc.,
9.125% due 3/01/2004.............. 2,950,625 2,610,000
NR* NR* 2,000,000 Cumberland Farms, 10.50% due
10/01/2003++...................... 1,957,500 1,660,000
BB- B1 2,500,000 Del Monte Corp., 10.00% due
5/01/2003......................... 2,310,000 1,700,000
B B2 3,000,000 Envirodyne Industries, Inc., 10.25%
due 12/01/2001.................... 3,056,250 2,100,000
CCC Caa 3,000,000 Grand Union Co., 12.25% due
7/15/2002......................... 3,090,000 1,185,000
D Ca 1,000,000 Kash N' Karry Food Stores, Inc.,
14.00% due 2/01/2001(c)........... 996,250 345,000
BB- Ba3 250,000 P&C Food Markets, Inc., 11.50% due
10/15/2001........................ 260,156 253,750
B B2 1,000,000 Penn Traffic Co., 9.625% due
4/15/2005......................... 1,013,760 870,000
B- B2 2,000,000 Pueblo Xtra International Inc.,
9.50% due 8/01/2003............... 2,004,375 1,680,000
B B2 1,000,000 Specialty Foods Corp., 10.25% due
8/15/2001......................... 1,000,000 890,000
------------- -------------
21,753,916 16,478,750
- ------------------------------------------------------------------------------------------------------------------------
HEALTH SERVICES--0.2% B B2 250,000 Continental Medical Systems Inc.,
10.875% due 8/15/2002............. 248,125 201,250
B B2 250,000 Continental Medsystems, Inc.,
10.375% due 4/01/2003............. 249,687 193,750
B+ B1 250,000 MEDIQ/PRN Life Support Services,
Inc., 11.125% due 7/01/1999....... 250,625 232,500
------------- -------------
748,437 627,500
- ------------------------------------------------------------------------------------------------------------------------
HIGH TECHNOLOGY--0.1% B B2 250,000 ComputerVision Corp., 10.875% due
8/15/1997......................... 250,625 230,000
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
53
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH VARIABLE SERIES FUNDS, INC.--HIGH CURRENT INCOME FUND
SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 1994 (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
S&P MOODY'S FACE VALUE
INDUSTRY RATINGS RATINGS AMOUNT ISSUE COST (NOTE 1A)
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
HOTELS & CASINOS--8.3% B B2 $ 2,250,000 Aztar Corp., 11.00% due
10/01/2002........................ $ 2,295,000 $ 2,047,500
BB B1 3,000,000 Bally's Park Place Funding Corp.,
9.25% due 3/15/2004............... 2,850,000 2,580,000
NR* NR* 158,000 Goldriver Hotel & Casino Finance
Corp., 11.375% due 8/31/1999...... 222,801 137,460
B+ B2 3,000,000 Greater Bay Properties, Inc.,
10.875% due 1/15/2004............. 2,755,000 2,430,000
BB+ B1 2,500,000 Harrah's Jazz Company, 14.25% due
11/15/2001........................ 2,500,000 2,625,000
BB- B1 3,260,000 Host Marriott Hospitality, Inc.,
10.375% due 6/15/2011............. 3,317,227 3,260,000
BB- B1 3,500,000 JQ Hammons Hotel, 8.875% due
2/15/2004......................... 3,092,500 3,027,500
B B2 2,500,000 Showboat Inc., 13.00% due
8/01/2009......................... 2,500,000 2,375,000
B B3 3,000,000 Trump Plaza Funding, Inc., 10.875%
due 6/15/2001..................... 2,963,277 2,280,000
NR* Caa 541,954 Trump Taj Mahal Funding, Inc.,
11.35% due 11/15/1999 (a)......... 422,261 321,997
------------- -------------
22,918,066 21,084,457
- ------------------------------------------------------------------------------------------------------------------------
INDUSTRIAL-- BB- B2 4,000,000 ADT Operations, 9.25% due
8/01/2003......................... 4,010,000 3,700,000
SERVICES--1.6% B- B3 500,000 Bell & Howell Co., 10.75% due
10/01/2002........................ 507,500 475,000
------------- -------------
4,517,500 4,175,000
- ------------------------------------------------------------------------------------------------------------------------
INDUSTRIALS--2.2% B B2 3,000,000 Coca-Cola Bottling Co., 9.00% due
11/15/2003........................ 2,973,750 2,632,500
B+ B2 2,800,000 Navistar Financial Co., 8.875% due
11/15/1998........................ 2,754,500 2,632,000
Thermadyne Industries, Inc.:
NR* Caa 154,000 10.25% due 5/01/2002................ 155,008 144,760
NR* Caa 215,000 10.75% due 11/01/2003............... 216,545 202,100
------------- -------------
6,099,803 5,611,360
- ------------------------------------------------------------------------------------------------------------------------
METALS & MINING--1.1% B- B2 1,000,000 Kaiser Aluminum Corp., 12.75% due
2/01/2003......................... 1,003,750 1,007,500
B- B3 3,000,000 Maxxam Group, Inc., 12.25%** due
8/01/2003......................... 1,957,826 1,710,000
------------- -------------
2,961,576 2,717,500
- ------------------------------------------------------------------------------------------------------------------------
PAPER--7.3% BB- Ba3 2,000,000 Doman Industries Ltd., 8.75% due
3/15/2004......................... 1,825,000 1,765,000
Fort Howard Corp.:
B+ B1 250,000 9.25% due 3/15/2001................. 250,000 233,750
B B2 3,000,000 9.00% due 2/01/2006................. 2,935,000 2,580,000
BB Ba3 2,000,000 Indah Kiat International Finance,
11.875% due 6/15/2002............. 1,957,500 1,940,000
BB- Ba3 2,100,000 Rainy River Forest Products, Inc.,
10.75% due 10/15/2001............. 2,094,897 2,084,250
B+ B1 3,000,000 Repap Wisconsin Finance, Inc., 9.25%
due 2/01/2002..................... 2,760,000 2,700,000
B B1 1,250,000 Riverwood International Corp.,
11.25% due 6/15/2002.............. 1,340,312 1,284,375
B+ B1 2,000,000 S.D. Warren Co., 12.00% due
12/15/2004........................ 2,000,000 2,045,000
Stone Container Corp.:
B B1 1,950,000 9.875% due 2/01/2001................ 1,869,375 1,833,000
B+ B1 1,300,000 10.75% due 10/01/2002............... 1,287,000 1,293,500
BB B1 1,000,000 Tjiwa Kimia International N.V.,
13.25% due 8/01/2001.............. 1,000,000 1,012,500
------------- -------------
19,319,084 18,771,375
- ------------------------------------------------------------------------------------------------------------------------
PAPER & PACKAGING--0.5% B- Caa 3,500,000 IVEX Holdings Corp., 13.25%** due
3/15/2005......................... 1,934,554 1,400,000
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
54
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH VARIABLE SERIES FUNDS, INC.--HIGH CURRENT INCOME FUND
SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 1994 (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
S&P MOODY'S FACE VALUE
INDUSTRY RATINGS RATINGS AMOUNT ISSUE COST (NOTE 1A)
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
POLLUTION CONTROL--1.4% B B3 $ 3,500,000 Mid-American Waste Systems, Inc.,
12.25% due 2/15/2003.............. $ 3,555,000 $ 3,500,000
- ------------------------------------------------------------------------------------------------------------------------
RAILROADS--0.4% B+ Ba3 1,000,000 Southern Pacific Rail Co., 9.375%
due 8/15/2005..................... 1,000,000 920,000
- ------------------------------------------------------------------------------------------------------------------------
RESTAURANTS--3.1% B B1 3,000,000 Family Restaurants Inc., 9.75% due
2/01/2002......................... 2,775,000 2,355,000
CCC+ Caa 3,890,000 Flagstar Corp., 11.375% due
9/15/2003......................... 3,701,100 3,228,700
Foodmaker, Inc.:
B- B2 1,500,000 9.75% due 6/01/2002................. 1,502,812 1,125,000
B+ Ba3 1,750,000 9.75% due 11/01/2003................ 1,722,700 1,316,875
------------- -------------
9,701,612 8,025,575
- ------------------------------------------------------------------------------------------------------------------------
RETAIL SPECIALTY--2.2% B+ B2 4,500,000 Bradlees, Inc., 11.00% due
8/01/2002......................... 4,466,562 4,095,000
B- B3 1,500,000 Pamida Holdings, Inc., 11.75% due
3/15/2003......................... 1,502,187 1,402,500
------------- -------------
5,968,749 5,497,500
- ------------------------------------------------------------------------------------------------------------------------
STEEL--1.3% B B2 1,500,000 AK Steel Holding Corp., 10.75% due
4/01/2004......................... 1,500,000 1,485,000
B+ B1 2,000,000 WCI Steel Inc., 10.50% due
3/01/2002......................... 2,000,000 1,920,000
------------- -------------
3,500,000 3,405,000
- ------------------------------------------------------------------------------------------------------------------------
TEXTILES--1.2% B+ B3 3,500,000 Westpoint Stevens Industries, Inc.,
9.375% due 12/15/2005............. 3,291,250 3,167,500
- ------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION--0.6% B+ Ba3 1,750,000 Viking Star Shipping Co., 9.625% due
7/15/2003......................... 1,735,937 1,627,500
- ------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION B+ B2 186,000 ACF Industries Inc., 11.60% due
SERVICES--0.8% 5/15/2000......................... 177,630 186,000
NR* NR* 3,700,000 Transtar Holdings Inc., 13.375%**
due 12/15/2003.................... 2,241,291 1,850,000
------------- -------------
2,418,921 2,036,000
- ------------------------------------------------------------------------------------------------------------------------
UTILITIES--2.5% B+ B1 3,453,000 Beaver Valley Funding Corp., 9.00%
due 6/01/2017..................... 3,252,225 2,451,630
CTC Mansfield Funding Corp.:
B+ Ba3 500,000 10.25% due 3/30/2003................ 490,000 465,000
B+ Ba3 1,500,000 11.125% due 9/30/2016............... 1,612,500 1,389,855
Midland Cogeneration Venture L.P.:
BB Ba3 946,678 ++10.33% due 7/23/2002.............. 927,745 893,980
B- B2 250,000 11.75% due 7/23/2005................ 250,000 228,357
Tucson Electric Power Co.++:
NR* NR* 570,386 10.21% due 1/01/2009................ 529,034 490,025
NR* NR* 500,000 10.732% due 1/01/2013............... 461,050 440,440
------------- -------------
7,522,554 6,359,287
- ------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN
CORPORATE BONDS--90.9% 256,011,161 232,281,376
- ------------------------------------------------------------------------------------------------------------------------
SHARES HELD PREFERRED STOCKS
- ------------------------------------------------------------------------------------------------------------------------
BROADCASTING &
PUBLISHING--0.5% 36,600 K-III Communications Corp........... 998,487 924,150
2,959 K-III Communications Corp. (a)...... 302,184 284,464
------------- -------------
1,300,671 1,208,614
- ------------------------------------------------------------------------------------------------------------------------
STEEL--1.0% 120,000 USX Capital Corp. (c)............... 3,000,000 2,655,000
- ------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN
PREFERRED STOCKS--1.5% 4,300,671 3,863,614
- ------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS
- ------------------------------------------------------------------------------------------------------------------------
ENERGY--0.0% 4,900 Petrolane Inc....................... 56,962 64,925
- ------------------------------------------------------------------------------------------------------------------------
FOOD & BEVERAGE--0.0% 4,169 Doskocil Companies, Inc. (c)........ 239,327 30,225
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
55
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH VARIABLE SERIES FUNDS, INC.--HIGH CURRENT INCOME FUND
SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 1994 (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
INDUSTRY HELD COMMON STOCKS COST (NOTE 1A)
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
HOTELS & CASINOS--0.0% 2,500 Goldriver Hotel & Casino Finance
Corp.............................. $ 18,603 $ 7,031
500 Trump Taj Mahal
Holding Corp. (Class A) (c)....... 250 5,000
------------- -------------
18,853 12,031
- ------------------------------------------------------------------------------------------------------------------------
INDUSTRIALS--0.0% 311 Thermadyne Industries, Inc. (c)..... 4,495 3,538
- ------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN
COMMON STOCKS--0.0% 319,637 110,719
- ------------------------------------------------------------------------------------------------------------------------
TRUSTS & WARRANTS
- ------------------------------------------------------------------------------------------------------------------------
COMMUNICATIONS--0.0% 18,350 American Telecasting, Inc.
(Warrants)
(b) (c)........................... 0 36,700
- ------------------------------------------------------------------------------------------------------------------------
ENERGY--0.0% 833 UGI Corp. (Warrants) (b) (c)........ 3,644 677
- ------------------------------------------------------------------------------------------------------------------------
HIGH TECHNOLOGY--0.0% 7,588 Anacomp, Inc. (Warrants) (b) (c)
++................................ 10,000 7,588
- ------------------------------------------------------------------------------------------------------------------------
HOTEL--0.0% 250 Goldriver Hotel & Casino Finance
Corp. (Liquidating Trust) ++
(c)............................... 6,000 4,282
- ------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN
TRUSTS & WARRANTS--0.0% 19,644 49,247
- ------------------------------------------------------------------------------------------------------------------------
FACE AMOUNT SHORT-TERM SECURITIES
- ------------------------------------------------------------------------------------------------------------------------
COMMERCIAL PAPER***--3.3% $ 4,000,000 CXC Inc., 6.00% due
1/13/1995......................... 3,990,667 3,990,667
4,632,000 General Electric Capital Corp.,
5.80% due 1/03/1995............... 4,629,015 4,629,015
------------- -------------
8,619,682 8,619,682
- ------------------------------------------------------------------------------------------------------------------------
US GOVERNMENT & AGENCY 4,000,000 Federal Farm Credit Banks, 5.57% due
OBLIGATIONS***--1.6% 1/11/1995......................... 3,992,573 3,992,573
- ------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN
SHORT-TERM SECURITIES--4.9% 12,612,255 12,612,255
- ------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS--97.3%............ $ 273,263,368 248,917,211
-------------
-------------
OTHER ASSETS LESS
LIABILITIES--2.7%................. 6,801,529
-------------
NET ASSETS--100.0%.................. $ 255,718,740
-------------
-------------
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<C> <S>
* Not Rated.
** Represents the yield to maturity at time of purchase.
*** 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 Fund.
(a) Represents a pay-in-kind security which may pay interest/dividend in additional face/shares.
(b) 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 adjustment under certain conditions until the
expiration date.
(c) Non-income producing security.
(d) Represents a zero coupon or step bond, the interest rate shown is the effective yield at the time of purchase.
(e) American Depositary Receipts.
+ Corresponding industry groups for convertible bonds:
(1) Food & Beverage
(2) Healthcare
(2) Waste Management
(4) Conglomerates
</TABLE>
56
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH VARIABLE SERIES FUNDS, INC.--HIGH CURRENT INCOME FUND
SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 1994 (CONCLUDED)
- --------------------------------------------------------------------------------
<TABLE>
<C> <S>
++ Restricted securities as to resale. The value of the Fund's investment in restricted securities was approximately
$12,082,000, representing 4.72% of net assets.
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
ISSUE ACQUISITION DATES COST (NOTE 1A)
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
Anacomp Inc. (Warrants).......................................... 10/23/90 $ 10,000 $ 7,588
Cumberland Farms, 10.50% due 10/01/2003.......................... 2/18/94 1,957,500 1,660,000
Energy Ventures, Inc., 10.25% due 3/15/2004...................... 3/17/94 to 4/25/94 2,901,875 2,749,500
Goldriver Hotel & Casino Finance Corp. (Liquidating Trust)....... 8/31/92 6,000 4,282
Liggett Group, Inc., 16.50% due 2/01/1999........................ 2/12/92 to 5/20/93 9,000 7,740
Midland Cogeneration Venture L.P., 10.33% due 7/23/2002.......... 6/10/93 927,745 893,980
NWCG Holdings Corp., 13.50% due 6/15/1999........................ 6/28/94 2,122,486 1,938,000
Polymer Group Inc., 12.25% due 7/15/2002......................... 6/17/94 to 12/07/94 3,967,500 3,890,000
Tucson Electric Power Co., 10.21% due 1/01/2009.................. 6/16/93 529,034 490,025
Tucson Electric Power Co., 10.732% due 1/01/2013................. 3/01/93 461,050 440,440
- ------------------------------------------------------------------------------------------------------------------------
TOTAL............................................................ $ 12,892,190 $ 12,081,555
------------ ------------
------------ ------------
</TABLE>
- --------------------------------------------------------------------------------
Ratings of issues shown have not been audited by Deloitte & Touche LLP.
See Notes to Financial Statements.
57
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH VARIABLE SERIES FUNDS, INC.--INTERMEDIATE GOVERNMENT BOND FUND
SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE VALUE
AMOUNT ISSUE COST (NOTE 1A)
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
US GOVERNMENT & AGENCY OBLIGATIONS
- ------------------------------------------------------------------------------------------------------------------------
FEDERAL NATIONAL MORTGAGE $ 500,000 Federal National Mortgage Association, 7.85%
ASSOCIATIONS--2.7% due 9/10/2004............................... $ 499,297 $ 479,685
- ------------------------------------------------------------------------------------------------------------------------
TOTAL FEDERAL NATIONAL MORTGAGE ASSOCIATION 499,297 479,685
- ------------------------------------------------------------------------------------------------------------------------
US TREASURY NOTES--11.5% US Treasury Notes:
1,000,000 8.875% due 2/15/1999.......................... 1,086,250 1,035,000
1,000,000 7.875% due 11/15/2004......................... 992,690 1,002,810
- ------------------------------------------------------------------------------------------------------------------------
TOTAL US TREASURY NOTES 2,078,940 2,037,810
- ------------------------------------------------------------------------------------------------------------------------
TOTAL US GOVERNMENT & AGENCY
OBLIGATIONS--14.2% 2,578,237 2,517,495
- ------------------------------------------------------------------------------------------------------------------------
SHORT-TERM SECURITIES
- ------------------------------------------------------------------------------------------------------------------------
US TREASURY BILLS*--84.5% US Treasury Bills:
14,641,000 4.05% due 1/05/1995........................... 14,631,117 14,631,117
103,000 4.10% due 1/05/1995........................... 102,930 102,930
80,000 4.09% due 1/19/1995........................... 79,818 79,818
93,000 4.45% due 2/02/1995........................... 92,609 92,609
152,000 4.20% due 2/09/1995........................... 151,273 151,273
- ------------------------------------------------------------------------------------------------------------------------
TOTAL SHORT-TERM SECURITIES--84.5% 15,057,747 15,057,747
- ------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS--98.7%...................... $ 17,635,984 17,575,242
------------
------------
OTHER ASSETS LESS LIABILITIES--1.3%........... 235,409
------------
NET ASSETS--100.0%............................ $ 17,810,651
------------
------------
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
*Certain 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 Fund.
See Notes to Financial Statements.
58
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH VARIABLE SERIES FUNDS, INC.--INTERNATIONAL BOND FUND
SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 1994 (IN US DOLLARS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE PERCENT OF NET
NORTH AMERICA FACE AMOUNT ISSUE COST (NOTE 1A) ASSETS
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Canadian Government
CANADA FOREIGN GOVERNMENT Bonds:
OBLIGATIONS
C$ 140,000 7.75% due
9/01/1999.......... $ 96,443 $ 95,173 1.0%
600,000 9.00% due
12/01/2004......... 441,161 424,740 4.3
537,604 519,913 5.3
TOTAL INVESTMENTS IN
CANADA 537,604 519,913 5.3
TOTAL INVESTMENTS IN
NORTH AMERICA 537,604 519,913 5.3
PACIFIC BASIN
AUSTRALIA FOREIGN GOVERNMENT Australian Government
OBLIGATIONS Bonds:
A$ 500,000 7.00% due
4/15/2000.......... 325,128 339,565 3.4
350,000 9.00% due
9/15/2004.......... 241,424 254,018 2.5
500,000 Queensland Treasury
Corp., 8.00% due
7/14/1999.......... 356,672 356,464 3.6
923,224 950,047 9.5
TOTAL INVESTMENTS IN
AUSTRALIA 923,224 950,047 9.5
JAPAN FOREIGN GOVERNMENT Japanese Government
OBLIGATIONS Bonds:
Yen 50,000,000 5.50% due
3/20/2002.......... 522,957 533,367 5.4
18,000,000 4.10% due
6/21/2004.......... 173,866 174,613 1.8
696,823 707,980 7.2
TOTAL INVESTMENTS IN
JAPAN 696,823 707,980 7.2
TOTAL INVESTMENTS IN
THE
PACIFIC BASIN 1,620,047 1,658,027 16.7
WESTERN EUROPE
DENMARK FOREIGN GOVERNMENT Dkr 3,000,000 Denmark Government
OBLIGATIONS Bond, 6.00% due
12/10/1999......... 451,033 440,770 4.4
TOTAL INVESTMENTS IN
DENMARK 451,033 440,770 4.4
EUROPEAN
CURRENCY FOREIGN GOVERNMENT ECU 400,000 Republic of Portugal,
UNIT OBLIGATIONS 6.00% due
2/16/2004.......... 404,448 404,990 4.1
TOTAL INVESTMENTS IN
EUROPEAN CURRENCY
UNITS 404,448 404,990 4.1
FINLAND FOREIGN GOVERNMENT Fmk 1,000,000 Finland Government
OBLIGATIONS Bond, 6.50% due
9/15/1996.......... 199,459 205,878 2.1
TOTAL FIXED-INCOME
INVESTMENTS IN
FINLAND 199,459 205,878 2.1
FRANCE FOREIGN GOVERNMENT Frf 2,500,000 French Government
OBLIGATIONS 'B-Tan', 4.75% due
4/12/1999.......... 423,692 415,416 4.2
1,750,000 French Government
'OAT', 6.75% due
10/25/2004......... 306,186 294,533 3.0
729,878 709,949 7.2
TOTAL INVESTMENTS IN
FRANCE 729,878 709,949 7.2
</TABLE>
59
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH VARIABLE SERIES FUNDS, INC.--INTERNATIONAL BOND FUND
SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 1994 (CONTINUED) (IN US DOLLARS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
WESTERN
EUROPE FACE VALUE PERCENT OF NET
(CONCLUDED) AMOUNT ISSUE COST (NOTE 1A) ASSETS
<S> <C> <C> <C> <C> <C> <C> <C> <C>
GERMANY FOREIGN GOVERNMENT DM 750,000 Treuhand-Obligationen,
OBLIGATIONS 5.75% due
4/29/1999.......... $ 462,861 $ 456,928 4.6%
750,000 Kingdom of Belgium,
7.25% due
10/18/1999......... 483,855 484,496 4.9
550,000 Treuhand-Obligationen,
6.25% due
7/29/1999.......... 354,485 341,014 3.4
1,301,201 1,282,438 12.9
TOTAL INVESTMENTS IN
GERMANY 1,301,201 1,282,438 12.9
IRELAND FOREIGN GOVERNMENT Iep 300,000 Irish Gilts, 6.25%
OBLIGATIONS due 4/01/1999...... 420,056 419,196 4.2
TOTAL INVESTMENTS IN
IRELAND 420,056 419,196 4.2
ITALY FOREIGN GOVERNMENT Buoni Poliennali del
OBLIGATIONS Tesoro (Italian
Government Bonds):
Lit 400,000,000 8.50% due 8/01/1999.. 228,653 216,562 2.2
400,000,000 8.50% due 4/01/1999.. 239,408 219,005 2.2
468,061 435,567 4.4
TOTAL INVESTMENTS IN
ITALY 468,061 435,567 4.4
NETHERLANDS FOREIGN GOVERNMENT Nlg 700,000 Netherlands
OBLIGATIONS Government Bond,
7.25% due
10/01/2004......... 386,865 389,540 3.9
TOTAL INVESTMENTS IN
THE NETHERLANDS 386,865 389,540 3.9
SPAIN FOREIGN GOVERNMENT Government of Spain:
OBLIGATIONS Pta 50,000,000 8.30% due
12/15/1998......... 360,283 341,125 3.4
30,000,000 8.00% due 5/30/2004.. 189,189 179,704 1.8
549,472 520,829 5.2
TOTAL INVESTMENTS IN
SPAIN 549,472 520,829 5.2
UNITED FOREIGN GOVERNMENT Pound Sterling United Kingdom Gilt,
KINGDOM OBLIGATIONS 800,000 9.00% due 3/03/2000.. 1,284,293 1,268,852 12.8
TOTAL INVESTMENTS IN
THE UNITED KINGDOM 1,284,293 1,268,852 12.8
TOTAL INVESTMENTS IN
WESTERN EUROPE 6,194,766 6,078,009 61.2
</TABLE>
60
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH VARIABLE SERIES FUNDS, INC.--INTERNATIONAL BOND FUND
SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 1994 (CONCLUDED) (IN US DOLLARS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE VALUE PERCENT OF NET
AMOUNT SHORT-TERM SECURITIES COST (NOTE 1A) ASSETS
<S> <C> <C> <C> <C> <C> <C> <C> <C>
COMMERCIAL PAPER* $ 467,000 General Electric
Capital Corp.,
5.80% due
1/03/1995.......... $ 466,774 $ 466,774 4.7%
US GOVERNMENT & AGENCY 800,000 Federal Home Loan
OBLIGATIONS* Bank, 5.74% due
1/23/1995.......... 797,066 797,066 8.0
500,000 Federal Home Loan
Mortgage Corp.,
5.85% due
1/27/1995.......... 497,806 497,806 5.0
600,000 Federal National
Mortgage
Association, 5.90%
due 1/05/1995...... 599,508 599,508 6.0
1,894,380 1,894,380 19.0
TOTAL INVESTMENTS IN
SHORT-TERM
SECURITIES......... 2,361,154 2,361,154 23.7
TOTAL INVESTMENTS.......................... $10,713,571 10,617,103 106.9
-----------
-----------
UNREALIZED DEPRECIATION ON FORWARD
FOREIGN EXCHANGE CONTRACTS**............... (66,829) (0.7)
LIABILITIES IN EXCESS OF OTHER ASSETS...... (616,980) (6.2)
----------- ----------
NET ASSETS................................. $ 9,933,294 100.0%
----------- ----------
----------- ----------
* Certain US Government & Agency Obligations and Commercial Paper are traded on a discount basis; the interest rates shown
are the discount rates paid at the time of purchase by the Fund.
</TABLE>
** Forward foreign exchange contracts as of December 31, 1994 were as follows:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
UNREALIZED APPRECIATION
EXPIRATION (DEPRECIATION)
FOREIGN CURRENCY PURCHASED DATE (NOTE 1B)
<S> <C> <C>
- --------------------------------------------------------------------------------
A$ 140,319... January 1995 $ 1,158
C$ 267,506... January 1995 (2,263)
DM 3,174,573... January 1995 20,110
Frf 463,735... January 1995 751
Lit 183,247,080... January 1995 (373)
- --------------------------------------------------------------------------------
TOTAL (US$ COMMITMENT--$2,531,259) $ 19,383
--------
- --------------------------------------------------------------------------------
<CAPTION>
FOREIGN CURRENCY SOLD
<S> <C> <C>
- --------------------------------------------------------------------------------
A$ (589,235)... January 1995 $ (10,285)
Dkr (1,046,077)... January 1995 (2,448)
DM (6,305,200)... January 1995 (75,385)
Frf (2,340,234)... January 1995 (1,483)
Lit (530,387,580)... January 1995 4,092
Pta (18,597,466)... February 1995 (703)
- --------------------------------------------------------------------------------
TOTAL (US$ COMMITMENT--$5,525,073) $ (86,212)
--------
- --------------------------------------------------------------------------------
TOTAL UNREALIZED DEPRECIATION ON FORWARD FOREIGN
EXCHANGE CONTRACTS--NET $ (66,829)
--------
--------
- --------------------------------------------------------------------------------
</TABLE>
+ Non-income producing security.
See Notes to Financial Statements.
61
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH VARIABLE SERIES FUNDS, INC.--INTERNATIONAL EQUITY FOCUS FUND
SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 1994 (IN US DOLLARS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES HELD/ STOCKS, BONDS, VALUE PERCENT OF NET
AFRICA INDUSTRY FACE AMOUNT WARRANTS & RIGHTS COST (NOTE 1A) ASSETS
<S> <C> <C> <C> <C> <C> <C> <C> <C>
SOUTH INVESTMENT MANAGEMENT 20,700 The Morgan Stanley Africa
AFRICA Investment Fund, Inc. (e).... $ 239,340 $ 235,463 0.1%
3,000 New South Africa Fund, Inc..... 41,805 42,375 0.0
13,500 Southern Africa Fund, Inc.
(e).......................... 200,143 187,313 0.1
----------- ----------- ---
481,288 465,151 0.2
TOTAL INVESTMENTS IN SOUTH
AFRICAN STOCKS 481,288 465,151 0.2
TOTAL INVESTMENTS IN
AFRICA 481,288 465,151 0.2
LATIN AMERICA
ARGENTINA ENERGY 56,000 Transportadora de Gas del Sur
S.A.......................... 744,919 525,000 0.2
OIL & GAS PRODUCERS 41,000 Yacimientos Petroliferos
Fiscales S.A. (Sponsored)
(ADR) (a).................... 1,047,553 876,375 0.4
TOTAL INVESTMENTS IN
ARGENTINEAN STOCKS 1,792,472 1,401,375 0.6
BRAZIL AUTOMOBILES 17,500 CAPCO Automotive Products Corp.
S.A. (e)..................... 210,710 210,000 0.1
STEEL 25,000 Usinas Siderurgicas de Minas
Gerais-Usiminas S.A. (d)..... 397,125 328,000 0.1
429,000,000 Usinas Siderurgicas de Minas
Gerais-Usiminas S.A.
(Preferred).................. 725,036 583,156 0.2
----------- ----------- ---
1,122,161 911,156 0.3
TELECOMMUNICATIONS 55,250 Telecomunicacoes Brasileiras
S.A.--Telebras (ADR) (a)
(d).......................... 2,239,272 2,458,625 1.0
8,900,000 Telecomunicacoes Brasileiras
S.A.--Telebras PN
(Preferred).................. 393,159 398,712 0.2
----------- ----------- ---
2,632,431 2,857,337 1.2
UTILITIES--ELECTRIC 2,170,000 Centrais Eletricas Brasileiras
S.A.--Electrobras 'B'
(Preferred).................. 735,350 754,113 0.3
UTILITIES--GAS 53,500 Companhia Generale des Eaux
(ADR) (a).................... 1,252,271 1,257,250 0.5
TOTAL INVESTMENTS IN
BRAZILIAN STOCKS 5,952,923 5,989,856 2.4
CHILE TELECOMMUNICATIONS 7,900 Compania de Telefonos de Chile
S.A. (ADR) (a)............... 950,388 622,125 0.2
TOTAL INVESTMENTS IN
CHILEAN STOCKS 950,388 622,125 0.2
MEXICO BEVERAGES 10,150 Panamerican Beverages, Inc.
(ADR) (a).................... 295,626 320,994 0.1
BUILDING & 319,625 Cementos Mexicanos, S.A. de
CONSTRUCTION C.V. (Cemex) (Series B)...... 2,283,655 1,699,231 0.7
FINANCIAL SERVICES 29,800 Servicios Financieros Quadrum,
S.A. de C.V. (ADR) (a) (d)... 642,075 186,250 0.1
HOLDING COMPANY 9,600 Desc Sociedad de Fomento
Industrial, S.A. de C.V.
'B'.......................... 72,459 46,041 0.0
LEISURE 233,500 Grupo Carso, S.A. de C.V.
(Series A1).................. 2,081,150 1,748,867 0.7
TELECOMMUNICATIONS 59,500 Telefonos de Mexico, S.A. de
C.V. (Telmex) (ADR) (a)...... 3,254,272 2,439,500 1.0
TOTAL INVESTMENTS IN
MEXICAN STOCKS 8,629,237 6,440,883 2.6
TOTAL INVESTMENTS IN
LATIN AMERICA 17,325,020 14,454,239 5.8
</TABLE>
62
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH VARIABLE SERIES FUNDS, INC.--INTERNATIONAL EQUITY FOCUS FUND
SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 1994 (CONTINUED) (IN US DOLLARS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NORTH SHARES HELD/ STOCKS, BONDS, VALUE PERCENT OF NET
AMERICA INDUSTRY FACE AMOUNT WARRANTS & RIGHTS COST (NOTE 1A) ASSETS
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CANADA DIVERSIFIED 127,500 Horsham Corp................... $ 2,065,790 $ 1,625,625 0.7%
ENERGY SOURCES 12,000 Imperial Oil Ltd. (ADR) (a).... 390,385 396,000 0.1
51,000 Imperial Oil Ltd. (Ordinary)... 1,666,831 1,681,698 0.7
----------- ----------- ---
2,057,216 2,077,698 0.8
FOREIGN GOVERNMENT Canadian Government Bonds:
OBLIGATIONS C$ 1,400,000 6.50% due 8/01/1996............ 1,098,976 966,644 0.4
C$ 2,650,000 5.75% due 3/01/1999............ 1,918,555 1,680,685 0.7
----------- ----------- ---
3,017,531 2,647,329 1.1
MULTI-INDUSTRY 129,671 American Barrick Resources
Corp......................... 3,323,482 2,900,633 1.2
24,350 American Barrick Resources
Corp. (ADR) (a).............. 617,883 541,788 0.2
----------- ----------- ---
3,941,365 3,442,421 1.4
TOTAL INVESTMENTS IN
CANADIAN STOCKS & BONDS 11,081,902 9,793,073 4.0
- ------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN
NORTH AMERICA 11,081,902 9,793,073 4.0
- ------------------------------------------------------------------------------------------------------------------------
<CAPTION>
PACIFIC
BASIN
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
AUSTRALIA DIVERSIFIED 798,000 BTR Nylex Ltd.................. 1,901,058 1,484,663 0.6
FOOD & BEVERAGE 129,855 Coca-Cola Amatil, Ltd.
(Ordinary)................... 702,346 825,441 0.3
FOOD & HOUSEHOLD 346,165 Burns Philp & Co., Ltd.
PRODUCTS (Ordinary)................... 1,030,868 818,459 0.3
MEDIA 103,347 The News Corp., Ltd. (ADR)
(a).......................... 510,504 404,579 0.2
51,674 The News Corp., Ltd.
(Preferred).................. 219,425 177,856 0.1
----------- ----------- ---
729,929 582,435 0.3
MERCHANDISING 30,850 Amway Asia Pacific Ltd......... 904,749 1,002,625 0.4
NATURAL GAS PIPELINES 56,521 Broken Hill Proprietary Co..... 754,227 858,776 0.3
PROPERTY 150,796 Lend Lease Corp................ 1,874,136 1,865,677 0.7
TOTAL INVESTMENTS IN
AUSTRALIAN STOCKS 7,897,313 7,438,076 2.9
- ------------------------------------------------------------------------------------------------------------------------
HONG KONG BANKING 232,000 Winton Holdings Ltd............ 68,750 58,780 0.0
FOODS 5,337,000 C.P. Pokphand Co., Ltd.
(Ordinary)................... 1,510,008 1,248,703 0.5
MULTI-INDUSTRY 63,000 Swire Pacific Ltd. (Class A)... 428,737 392,528 0.2
PROPERTY 343,000 Hang Lung Development Co., Ltd.
(Ordinary)................... 585,187 487,720 0.2
34,300 Hang Lung Development Co., Ltd.
(Warrants) (c) (e)........... 0 5,143 0.0
----------- ----------- ---
585,187 492,863 0.2
TELECOMMUNICATIONS 1,863,000 Hong Kong Telecommunications
Ltd. (Ordinary).............. 3,710,688 3,552,126 1.4
UTILITIES 282,000 The Hong Kong & China Gas Co.,
Ltd. (Ordinary).............. 529,795 455,662 0.2
UTILITIES--ELECTRIC 752,800 China Light & Power Co., Ltd.
(Ordinary)................... 3,706,269 3,211,272 1.3
TOTAL INVESTMENTS IN
HONG KONG STOCKS & WARRANTS 10,539,434 9,411,934 3.8
INDONESIA BANKING--
INTERNATIONAL 352,500 PT Bank Bali................... 1,016,998 994,766 0.4
FOOD & HOUSEHOLD 337,000 PT Wicaksana Overseas
PRODUCTS International (e)............ 519,283 966,363 0.4
TELECOMMUNICATIONS 15,160 PT Indonesia Satellite (ADR)
(a).......................... 560,218 541,970 0.2
TOTAL INVESTMENTS IN
INDONESIAN STOCKS 2,096,499 2,503,099 1.0
</TABLE>
63
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH VARIABLE SERIES FUNDS, INC.--INTERNATIONAL EQUITY FOCUS FUND
SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 1994 (CONTINUED) (IN US DOLLARS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PACIFIC
BASIN SHARES HELD/ STOCKS, BONDS, VALUE PERCENT OF NET
(CONTINUED) INDUSTRY FACE AMOUNT WARRANTS & RIGHTS COST (NOTE 1A) ASSETS
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
JAPAN AUTOMOBILES 257,000 Suzuki Motor Co. (Ordinary).... $ 2,913,077 $ 3,022,010 1.2%
90,000 Toyota Motor Corp.............. 1,936,140 1,899,497 0.8
----------- ----------- ---
4,849,217 4,921,507 2.0
BEVERAGES 16,000 Chukyo Coca-Cola Bottling Co.,
Ltd. (Ordinary).............. 226,551 181,709 0.1
15,000 Hokkaido Coca-Cola Bottling
Co., Ltd. (Ordinary)......... 249,702 203,518 0.1
17,000 Kinki Coca-Cola Bottling Co.,
Ltd. (Ordinary).............. 312,980 232,362 0.1
19,000 Mikuni Coca-Cola Bottling Co.,
Ltd.......................... 340,923 259,698 0.1
17,600 Sanyo Coca-Cola Bottling Co.,
Ltd.......................... 267,996 263,558 0.1
----------- ----------- ---
1,398,152 1,140,845 0.5
CAPITAL GOODS 596,000 Mitsubishi Heavy Industries,
Ltd.......................... 4,091,717 4,552,362 1.8
CHEMICALS 14,000 Shimachu Co. (Ordinary)........ 586,177 505,126 0.2
119,000 Shin-Etsu Chemical Co., Ltd.
(Ordinary)................... 2,474,232 2,368,040 1.0
----------- ----------- ---
3,060,409 2,873,166 1.2
CONSUMER 11,000 Sony Corp...................... 682,355 624,623 0.2
ELECTRONICS
ELECTRICAL
CONSTRUCTION 45,000 Chudenko Corp. (Ordinary)...... 1,688,835 1,650,754 0.7
63,000 Sanki Engineering Co., Ltd..... 888,004 747,136 0.3
44,000 Taihei Dengyo Kaisha, Ltd...... 1,174,357 1,052,462 0.4
----------- ----------- ---
3,751,196 3,450,352 1.4
ELECTRICAL EQUIPMENT 300,000 Hitachi Ltd.................... 2,980,233 2,981,910 1.2
133,000 Murata Manufacturing Co.,
Ltd.......................... 5,003,881 5,146,231 2.1
74,000 The Nippon Signal Co., Ltd..... 1,013,087 758,593 0.3
85,000 Rohm Co........................ 3,261,820 3,605,025 1.5
240,000 Sumitomo Electric Industries,
Ltd.......................... 3,394,542 3,425,126 1.4
----------- ----------- ---
15,653,563 15,916,885 6.5
INSURANCE 230,000 Dai-Tokyo Fire & Marine
Insurance Co., Ltd........... 1,715,601 1,678,191 0.7
70,000 Fuji Fire & Marine Insurance
Co.,
Ltd.......................... 477,842 448,141 0.2
292,000 Koa Fire & Marine Insurance
Co.,
Ltd.......................... 2,008,042 2,013,186 0.8
149,000 Mitsui Marine & Fire Insurance
Co., Ltd..................... 1,217,441 1,127,608 0.5
282,000 Nichido Fire & Marine Insurance
Co., Ltd..................... 2,210,110 2,445,889 1.0
117,000 Nippon Fire & Marine Insurance
Co., Ltd..................... 858,344 813,709 0.3
245,000 Sumitomo Marine & Fire
Insurance Co., Ltd........... 2,084,181 2,117,588 0.8
236,000 Tokio Marine & Fire Insurance
Co., Ltd. (Ordinary)......... 2,855,929 2,893,668 1.2
201,000 Yasuda Fire & Marine Insurance
Co., Ltd..................... 1,505,908 1,474,673 0.6
----------- ----------- ---
14,933,398 15,012,653 6.1
OFFICE EQUIPMENT 435,000 Canon, Inc. (Ordinary)......... 7,169,831 7,388,442 3.0
PACKAGING 133,000 Toyo Seikan Kaisha, Ltd.
(Ordinary)................... 4,075,420 4,437,789 1.8
PHARMACEUTICALS 122,000 Sankyo Co., Ltd. (Ordinary).... 2,950,570 3,040,804 1.2
124,000 Taisho Pharmaceutical Co., Ltd.
(Ordinary)................... 2,478,234 2,380,302 1.0
----------- ----------- ---
5,428,804 5,421,106 2.2
RETAILING 87,000 Ito Yokado Co., Ltd.
(Ordinary)................... 4,474,880 4,660,402 1.9
30,000 Sangetsu Co., Ltd.............. 1,120,547 904,523 0.4
----------- ----------- ---
5,595,427 5,564,925 2.3
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
STEEL 48,000 Maruichi Steel Tube, Ltd.
(Ordinary)................... 840,875 863,518 0.3
TRANSPORTATION 185,000 Nippon Express Co., Ltd........ 1,925,618 1,859,296 0.7
TOTAL INVESTMENTS IN
JAPANESE STOCKS 73,455,982 74,027,469 30.0
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
64
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH VARIABLE SERIES FUNDS, INC.--INTERNATIONAL EQUITY FOCUS FUND
SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 1994 (CONTINUED) (IN US DOLLARS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PACIFIC
BASIN SHARES HELD/ STOCKS, BONDS, VALUE PERCENT OF NET
(CONCLUDED) INDUSTRY FACE AMOUNT WARRANTS & RIGHTS COST (NOTE 1A) ASSETS
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
MALAYSIA BANKING 83,000 Public Bank (Malaysia) BHD
'Foreign'.................... $ 188,648 $ 165,837 0.1%
BROADCAST--MEDIA 367,000 Sistem Televisyen Malaysia
BHD.......................... 1,060,002 797,982 0.3
FINANCIAL SERVICES 198,000 Commerce Asset Holdings BHD.... 1,016,180 798,981 0.3
FOOD 134,000 Nestle (Malaysia) BHD.......... 893,373 892,458 0.3
LEISURE 22,500 Genting BHD.................... 138,632 193,046 0.1
NEWSPAPER/PUBLISHING 231,000 New Straits Times Press BHD.... 931,391 742,096 0.3
TOTAL INVESTMENTS IN
MALAYSIAN STOCKS 4,228,226 3,590,400 1.4
NEW FOREIGN
ZEALAND GOVERNMENT New Zealand Government Bonds:
NZ$ OBLIGATIONS 1,600,000 9.00% due 11/15/1996........... 973,385 1,010,864 0.4
NZ$ 1,650,000 6.50% due 2/15/2000............ 921,954 959,224 0.4
NZ$ 10,000,000 New Zealand Treasury Bills,
7.54%++ due 1/11/1995........ 6,017,116 6,386,880 2.6
----------- ----------- ---
7,912,455 8,356,968 3.4
PAPER & FOREST 1,306,000 Carter Holt Harvey, Ltd........ 3,097,064 2,673,852 1.1
PRODUCTS
TOTAL INVESTMENTS IN
NEW ZEALAND STOCKS & BONDS 11,009,519 11,030,820 4.5
PHILIPPINES MULTI--INDUSTRY 39,000 Benpres Holdings Corp. (d)
(e).......................... 421,200 351,000 0.1
TOTAL INVESTMENTS IN
PHILIPPINE STOCKS 421,200 351,000 0.1
TAIWAN MERCHANDISING 74,360 Hocheng Group Corp. (ADR) (a)
(d).......................... 2,149,131 1,673,100 0.7
TOTAL INVESTMENTS IN
TAIWANESE STOCKS 2,149,131 1,673,100 0.7
THAILAND REAL ESTATE 106,000 Bangkok Land Ltd. 'Foreign'.... 349,820 263,997 0.1
TOTAL INVESTMENTS IN THAI
STOCKS 349,820 263,997 0.1
TOTAL INVESTMENTS IN THE
PACIFIC BASIN 112,147,124 110,289,895 44.5
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
SOUTHEAST
ASIA
INDIA MEDIA 203,000 Videocon International Ltd.
(ADR)
(a) (e)...................... 1,900,666 939,890 0.4
TOBACCO 151,000 Indian Tobacco Co. Ltd. (e).... 2,015,375 1,510,000 0.6
TOTAL INVESTMENTS IN
INDIAN STOCKS 3,916,041 2,449,890 1.0
TOTAL INVESTMENTS IN
SOUTHEAST ASIA 3,916,041 2,449,890 1.0
WESTERN EUROPE
AUSTRIA UTILITIES 8,395 Verbund Oesterreichische
Elekrizitats AG.............. 489,227 484,993 0.2
TOTAL INVESTMENTS IN
AUSTRIAN STOCKS 489,227 484,993 0.2
</TABLE>
65
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH VARIABLE SERIES FUNDS, INC.--INTERNATIONAL EQUITY FOCUS FUND
SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 1994 (CONTINUED) (IN US DOLLARS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
WESTERN
EUROPE SHARES HELD/ STOCK, BONDS, VALUE PERCENT OF NET
(CONTINUED) INDUSTRY FACE AMOUNT WARRANTS & RIGHTS COST (NOTE 1A) ASSETS
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BELGIUM BANKING 2,300 Generale de Banque S.A.
(Ordinary)................... $ 567,216 $ 583,863 0.2%
BUILDING MATERIALS--
GLASS 670 Glaverbel S.A. (Ordinary)...... 89,188 88,729 0.1
TOTAL INVESTMENTS IN
BELGIAN STOCKS 656,404 672,592 0.3
FINLAND BANKING 414,400 Kansallis-Osake-Pankki (e)..... 695,163 484,540 0.2
330,000 Unitas Bank Ltd. (Ordinary)
(e).......................... 908,262 851,253 0.3
----------- ----------- ---
1,603,425 1,335,793 0.5
DIVERSIFIED 27,500 Outokumpu OY (e)............... 402,133 505,867 0.2
PAPER & FOREST
PRODUCTS 75,400 Enso-Gutzeit OY (Registered)... 555,578 648,859 0.3
15,050 Metsa Serla OY................. 610,058 661,888 0.3
33,775 Repola OY S (d)................ 568,828 610,585 0.2
----------- ----------- ---
1,734,464 1,921,332 0.8
TOTAL INVESTMENTS IN
FINNISH STOCKS 3,740,022 3,762,992 1.5
FRANCE AUTOMOBILES 9,400 Peugeot S.A.................... 1,392,143 1,290,473 0.5
BANKING 7,400 Compagnie Financiere de
Paribas...................... 556,543 492,686 0.2
8,400 Compagnie Financiere de Suez... 471,127 385,971 0.2
2,500 Societe Generale de
Surveillance S.A. (Class A)
(Ordinary)................... 272,615 263,035 0.1
----------- ----------- ---
1,300,285 1,141,692 0.5
CHEMICALS 18,000 Rhone-Poulenc S.A.............. 454,174 418,267 0.2
INSURANCE 6,270 Societe Centrale du Groupe des
Assurances Nationales S.A.... 548,917 321,026 0.1
MULTI-INDUSTRY 1,765 EuraFrance S.A................. 588,784 542,542 0.2
PACKAGING 12,700 Pechiney International S.A..... 353,880 381,095 0.2
UTILITIES 5,984 Compagnie Generale des Eaux.... 684,057 582,464 0.2
TOTAL INVESTMENTS IN
FRENCH STOCKS 5,322,240 4,677,559 1.9
GERMANY AUTOMOBILE PARTS 2,620 Continental AG................. 394,839 382,506 0.2
4,440 Continental AG (Warrants) (c)
(e).......................... 252,413 195,039 0.1
----------- ----------- ---
647,252 577,545 0.3
AUTOMOBILES 3,100 Daimler-Benz AG................ 1,480,090 1,525,969 0.6
3,350 Volkswagen AG (Ordinary)....... 919,646 921,899 0.4
3,500 Volkswagen AG (Preferred)...... 788,556 769,864 0.3
2,659 Volkswagen AG (Preferred)
(Warrants) (c) (e)........... 239,121 237,043 0.1
----------- ----------- ---
3,427,413 3,454,775 1.4
BANKING 2,400 Deutsche Bank AG (Ordinary).... 1,139,399 1,116,279 0.4
CHEMICALS 4,500 BASF AG (Ordinary)............. 858,048 928,779 0.4
2,900 Bayer AG (Ordinary)............ 663,276 680,039 0.3
----------- ----------- ---
1,521,324 1,608,818 0.7
INSURANCE 340 Munich Reinsurance Co.
(Ordinary) (e)............... 599,135 636,951 0.3
MACHINERY 17,250 Kloeckner Werke AG (e)......... 1,232,262 1,376,211 0.6
6,100 Mannesmann AG.................. 1,547,131 1,662,920 0.7
----------- ----------- ---
2,779,393 3,039,131 1.3
METALS & MINING 10,200 Thyssen AG (Ordinary) (e)...... 1,737,040 1,947,093 0.8
UTILITIES 6,500 Vereinigte Elektrizitaets &
Bergwerks AG (Veba)
(Warrants) (c) (e)........... 279,834 332,642 0.1
TOTAL INVESTMENTS IN GERMAN
STOCKS & WARRANTS 12,130,790 12,713,234 5.3
</TABLE>
66
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH VARIABLE SERIES FUNDS, INC.--INTERNATIONAL EQUITY FOCUS FUND
SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 1994 (CONTINUED) (IN US DOLLARS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
WESTERN
EUROPE SHARES HELD/ STOCK, BONDS, VALUE PERCENT OF NET
(CONTINUED) INDUSTRY FACE AMOUNT WARRANTS & RIGHTS COST (NOTE 1A) ASSETS
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
GREECE BEVERAGES 13,000 Hellenic Bottling Co........... $ 382,927 $ 460,609 0.2%
TOTAL INVESTMENTS IN
GREEK STOCKS 382,927 460,609 0.2
HUNGARY FOODS 1,633 Pick Szeged Reszvenytarsasag
(ADR) (a).................... 111,887 95,922 0.0
TOTAL INVESTMENTS IN
HUNGARIAN STOCKS 111,887 95,922 0.0
IRELAND BANKING 21,200 Allied Irish Banks PLC
(Ordinary)................... 84,167 88,379 0.0
BANKING & FINANCIAL 640,000 Anglo Irish Bank Corp.......... 507,043 553,370 0.2
BUILDING & 70,000 CRH PLC (Ordinary)............. 335,762 385,846 0.2
CONSTRUCTION
CLOSED-END FUNDS 520,000 First Ireland Investment Co.... 782,598 814,320 0.3
TOTAL INVESTMENTS IN
IRISH STOCKS 1,709,570 1,841,915 0.7
ITALY BUILDING &
CONSTRUCTION 96,100 Fochi Filippo S.p.A............ 304,917 210,215 0.1
DIVERSIFIED 335,500 CIR NC Savings................. 157,313 229,588 0.1
477,700 Compagnie Industrial Riunite
S.p.A. (CIR)................. 494,269 557,110 0.2
----------- ----------- ---
651,582 786,698 0.3
TELECOMMUNICATIONS 468,816 Stet Savings Telecom........... 1,130,247 1,112,303 0.5
TOTAL INVESTMENTS IN
ITALIAN STOCKS 2,086,746 2,109,216 0.9
NETHERLANDS BANKING 25,000 ABN Amro Bank (Ordinary)....... 875,455 869,778 0.3
CHEMICALS 9,000 Akzo N.V. (Ordinary)........... 983,573 1,040,619 0.4
8,500 European Vinyls Corporation
International N.V. (e)....... 375,244 377,135 0.1
----------- ----------- ---
1,358,817 1,417,754 0.5
ELECTRICAL EQUIPMENT 68,000 Philips Industries Inc......... 1,794,160 2,016,617 0.8
INSURANCE 15,600 AEGON N.V. (Ordinary).......... 813,328 999,077 0.4
20,000 Amev N.V. (Ordinary)........... 825,683 850,450 0.3
19,300 Internationale Nederlanden
Groep N.V.................... 816,416 913,109 0.4
----------- ----------- ---
2,455,427 2,762,636 1.1
PAPER & FOREST
PRODUCTS 800 Koninklijke KNP (Preferred)
(e).......................... 3,250 3,309 0.0
22,055 Koninklijke KNP (Warrants) (c)
(e).......................... 76,134 81,822 0.0
----------- ----------- ---
79,384 85,131 0.0
TELECOMMUNICATIONS 11,500 Koninklijke Ptt Nederland
N.V.......................... 359,562 388,155 0.2
TRANSPORTATION 42,000 KLM Royal Dutch Airlines....... 1,057,842 1,032,310 0.4
TOTAL INVESTMENTS IN
NETHERLANDS STOCKS 7,980,647 8,572,381 3.3
NORWAY OIL & GAS PRODUCERS 13,100 Saga Petroleum A.S. (Class
A)........................... 154,863 142,518 0.1
84,000 Saga Petroleum A.S. (Class
B)........................... 951,425 870,337 0.3
----------- ----------- ---
1,106,288 1,012,855 0.4
TOTAL INVESTMENTS IN
NORWEGIAN STOCKS 1,106,288 1,012,855 0.4
PORTUGAL BANKING 80,400 Banco Commercial Portugues S.A.
(ADR) (a).................... 1,256,303 1,015,050 0.4
</TABLE>
67
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH VARIABLE SERIES FUNDS, INC.--INTERNATIONAL EQUITY FOCUS FUND
SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 1994 (CONTINUED) (IN US DOLLARS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
WESTERN
EUROPE SHARES HELD/ STOCK, BONDS, VALUE PERCENT OF NET
(CONTINUED) INDUSTRY FACE AMOUNT WARRANTS & RIGHTS COST (NOTE 1A) ASSETS
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
PORTUGAL BUILDING &
(CONCLUDED) CONSTRUCTION 11,500 Sociedade de Construsoes Soares
de Costa S.A................. $ 228,190 $ 217,008 0.1%
2,300 Sociedade de Construsoes Soares
de Costa S.A. (Baby
Shares)...................... 0 43,402 0.0
1,150 Sociedade de Construsoes Soares
de Costa S.A. (Ordinary)..... 14,384 21,701 0.0
----------- ----------- ---
242,574 282,111 0.1
RETAIL 7,800 Estabelecimentes Jeronimo
Martins
& Filho...................... 308,013 334,068 0.1
42,750 Sonae Investimentos S.A........ 887,629 984,449 0.4
----------- ----------- ---
1,195,642 1,318,517 0.5
TOTAL INVESTMENTS IN
PORTUGUESE STOCKS 2,694,519 2,615,678 1.0
SPAIN BANKING 4,800 Banco Popular Espanol
(Ordinary)................... 545,778 571,038 0.2
OIL--RELATED 51,000 Repsol S.A..................... 1,551,028 1,384,036 0.6
TELECOMMUNICATIONS 84,800 Telefonica Nacional de Espana
S.A. (Ordinary).............. 1,107,347 1,002,387 0.4
TOTAL INVESTMENTS IN
SPANISH STOCKS 3,204,153 2,957,461 1.2
SWEDEN APPLIANCES 15,181 Electrolux AB.................. 758,842 771,763 0.3
AUTOMOBILES &
EQUIPMENT 110,000 Volvo AB 'B'................... 2,026,886 2,076,647 0.8
BANKING 34,700 Svenska Handelsbanken, Inc.
(Class A) (e)................ 463,127 458,561 0.2
BUILDING RELATED 19,100 Svedala Industry (d)........... 388,692 445,576 0.2
ENGINEERING 38,850 SKF AB 'A' (e)................. 716,222 644,374 0.3
15,300 SKF AB 'B' Free (e)............ 297,054 252,737 0.1
----------- ----------- ---
1,013,276 897,111 0.4
INSURANCE 10,260 Skandia Group Forsakrings AB... 154,301 177,784 0.1
METALS & MINING 105,000 Avesta Sheffield AB (e)........ 917,807 1,040,683 0.4
TOTAL INVESTMENTS IN
SWEDISH STOCKS 5,722,931 5,868,125 2.4
SWITZERLAND CHEMICALS 1,400 Ciba-Geigy AG (Registered)..... 786,967 836,252 0.3
ELECTRICAL EQUIPMENT 1,500 BBC Brown Boveri & Cie......... 1,152,901 1,292,925 0.5
INSURANCE 135 Baloise Holding Insurance...... 240,990 245,736 0.1
TOTAL INVESTMENTS IN
SWISS STOCKS 2,180,858 2,374,913 0.9
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
TURKEY AUTOMOBILES 53,200 Turk Otomobil Fabrikasi A.S.
(GDS) (b) (e)................ 426,100 228,760 0.1
BEVERAGES 215,000 Erciyas Biracilik Ve Malt
Sanayii A.S.................. 171,663 159,156 0.1
BUILDING MATERIALS 138,250 Alarko Holdings A.S............ 103,023 118,500 0.0
230,900 Cimentas Izmir Cimento
Fabrikasi T.A.S. (e)......... 169,259 161,930 0.1
----------- ----------- ---
272,282 280,430 0.1
INSURANCE 918,000 Aksigorta A.S.................. 229,500 185,984 0.1
STEEL 11,019,000 Izmir Demir Celik Sanayii A.S.
(e).......................... 753,889 601,036 0.2
TOTAL INVESTMENTS IN
TURKISH STOCKS 1,853,434 1,455,366 0.6
UNITED KINGDOM AEROSPACE 316,500 Rolls Royce PLC (Ordinary)..... 782,759 892,150 0.4
BEVERAGE 154,100 Grand Metropolitan PLC
(Ordinary)................... 1,025,810 984,588 0.4
</TABLE>
68
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH VARIABLE SERIES FUNDS, INC.--INTERNATIONAL EQUITY FOCUS FUND
SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 1994 (CONTINUED) (IN US DOLLARS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
WESTERN
EUROPE SHARES HELD/ STOCK, BONDS, VALUE PERCENT OF NET
(CONCLUDED) INDUSTRY FACE AMOUNT WARRANTS & RIGHTS COST (NOTE 1A) ASSETS
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
UNITED
BUILDING MATERIALS 248,000 Tarmac PLC (Ordinary).......... $ 623,831 $ 464,100 0.2%
KINGDOM CHEMICALS 104,100 Imperial Chemical Industries
(CONCLUDED) PLC
(ADR) (a).................... 1,278,683 1,220,209 0.5
CONSUMER--GOODS 82,600 Vendome Luxury Group (Units)... 485,376 649,345 0.3
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ELECTRICAL EQUIPMENT 239,200 General Electric Co., Ltd. PLC
(Ordinary)................... 1,122,649 1,026,369 0.4
FOOD & BEVERAGE 80,300 Tate & Lyle PLC (Ordinary)..... 517,020 533,179 0.2
FOOD MANUFACTURING 42,300 Unilever Capital Corp.......... 660,311 766,749 0.3
FOREIGN GOVERNMENT Pound3,100,000 UK Treasury Gilt, 8.75% due
OBLIGATIONS Sterling 9/01/1997.................... 5,123,042 4,894,044 2.0
INDUSTRIAL--OTHER 356,300 Tomkins PLC.................... 1,235,028 1,238,684 0.5
INSURANCE 86,200 Commercial Union Assurance Co.
PLC (Ordinary)............... 764,061 684,395 0.3
LEISURE &
ENTERTAINMENT 343,100 Forte PLC...................... 1,262,708 1,300,253 0.5
174,500 The Rank Organisation PLC
(Ordinary)................... 1,070,424 1,139,523 0.5
----------- ----------- ---
2,333,132 2,439,776 1.0
METALS & MINING 96,100 The RTZ Corp. PLC.............. 1,251,499 1,247,584 0.5
MULTI-INDUSTRY 73,000 BTR PLC (Ordinary)............. 354,879 336,095 0.1
OIL--RELATED 91,100 British Petroleum Co., Ltd..... 538,573 607,029 0.2
74,300 The Shell Transport & Trading
Co. PLC...................... 828,784 813,313 0.3
----------- ----------- ---
1,367,357 1,420,342 0.5
PHARMACEUTICALS 45,500 Glaxo Holdings PLC............. 475,215 472,407 0.2
203,600 SmithKline Beecham Corp. PLC
(Class A).................... 1,294,680 1,445,929 0.6
----------- ----------- ---
1,769,895 1,918,336 0.8
RETAIL TRADE 272,100 Sears PLC...................... 489,342 468,719 0.2
TELECOMMUNICATIONS 300,000 Racal Electronics PLC.......... 1,015,204 1,057,050 0.4
UTILITIES 252,100 British Telecommunications PLC
(Ordinary)................... 1,471,567 1,490,327 0.6
TOTAL INVESTMENTS IN THE
UNITED KINGDOM STOCKS &
BONDS 23,671,445 23,732,041 9.6
TOTAL INVESTMENTS IN
WESTERN EUROPE 75,044,088 75,407,852 30.4
</TABLE>
<TABLE>
<CAPTION>
FACE
AMOUNT SHORT-TERM SECURITIES
<S> <C> <C> <C> <C> <C> <C> <C> <C>
COMMERCIAL PAPER* $ 7,180,000 General Electric Capital Corp.,
5.80% due 1/03/1995.......... 7,175,373 7,175,373 2.9
TOTAL INVESTMENTS IN
COMMERCIAL PAPER 7,175,373 7,175,373 2.9
</TABLE>
69
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH VARIABLE SERIES FUNDS, INC.--INTERNATIONAL EQUITY FOCUS FUND
SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 1994 (CONTINUED) (IN US DOLLARS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE PERCENT OF NET
FACE AMOUNT SHORT-TERM SECURITIES COST (NOTE 1A) ASSETS
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
US GOVERNMENT &
AGENCY OBLIGATIONS* $20,000,000 Federal Home Loan Mortgage
Association, 5.75% due
1/31/1995.................... $19,897,778 $19,897,778 8.0%
US Treasury Bills:
250,000 5.649% due 3/23/1995........... 246,743 246,868 0.1
70,000 5.68% due 3/23/1995............ 69,083 69,123 0.0
165,000 5.25% due 3/30/1995............ 162,834 162,727 0.1
820,000 5.34% due 3/30/1995............ 809,053 808,705 0.3
430,000 5.37% due 3/30/1995............ 424,227 424,077 0.2
2,000,000 5.55% due 3/30/1995............ 1,972,250 1,972,450 0.8
100,000 5.76% due 3/30/1995............ 98,649 98,622 0.1
TOTAL INVESTMENTS IN US
GOVERNMENT & AGENCY
OBLIGATIONS 23,680,617 23,680,350 9.6
TOTAL INVESTMENTS IN
SHORT-TERM SECURITIES 30,855,990 30,855,723 12.5
<CAPTION>
NUMBER OF
CONTRACTS/ PREMIUMS
FACE AMOUNT ISSUE PAID
<S> <C> <C> <C> <C> <C> <C> <C> <C>
OPTIONS CALL OPTIONS
PURCHASED PURCHASED US$ 15,000 Nikkei, expiring March 1995 at
Yen 1950.................... 50,500 77,638 0.0
35,905 + Topix Second Section, expiring
May 1995 at Yen 2330........ 80,000 15,755 0.0
50,750 + Topix Second Section, expiring
July 1995 at Yen 2512.93.... 137,151 21,754 0.0
65,535 + Topix Second Section, expiring
August 1995 at Yen
2453.64..................... 193,711 50,788 0.0
42,919 + Topix Second Section, expiring
September 1995 at Yen
2311.10..................... 100,000 45,024 0.0
------------ ------------ ----------
561,362 210,959 0.0
CURRENCY PUT
OPTIONS PURCHASED Yen4,000,000 Japanese Yen, expiring
February 1995 at Yen 101.... 80,000 24,400 0.0
8,000,000 Japanese Yen, expiring
February 1995 at Yen 100.... 167,200 78,400 0.0
7,000,000 Japanese Yen, expiring March
1995 at Yen 98.5............ 109,900 128,100 0.1
1,500,000 Japanese Yen, expiring June
1995 at Yen 100............. 45,300 26,700 0.0
------------ ------------ ----------
402,400 257,600 0.1
TOTAL OPTIONS PURCHASED 963,762 468,559 0.1
TOTAL INVESTMENTS 251,815,215 244,184,382 98.5
<CAPTION>
NOMINAL PREMIUMS
VALUE RECEIVED
<S> <C> <C> <C> <C> <C> <C> <C> <C>
OPTIONS CURRENCY CALL OPTIONS
WRITTEN WRITTEN Yen4,000,000 Japanese Yen, expiring
February 1995 at Yen
95.75....................... (80,000) (13,200) 0.0
8,000,000 Japanese Yen, expiring
February 1995 at Yen 94.6... (167,200) (12,000) 0.0
7,000,000 Japanese Yen, expiring March
1995 at Yen 93.06........... (109,900) (11,900) 0.0
------------ ------------ ----------
(357,100) (37,100) 0.0
PUT OPTIONS WRITTEN
US$ 1,500 FTSE, expiring January 1995 at
Pound Sterling 2800......... (63,211) (7,940) 0.0
65,535 + Topix Second Section, expiring
August 1995 at Yen
2453.64..................... (136,111) (227,581) (0.1)
------------ ------------ ----------
(199,322) (235,521) (0.1)
CURRENCY PUT OPTIONS
WRITTEN Yen1,500,000 Japanese Yen, expiring June
1995 at Yen 108............. (16,500) (4,200) 0.0
TOTAL OPTIONS WRITTEN (572,922) (276,821) (0.1)
TOTAL INVESTMENTS, NET OF OPTIONS WRITTEN............................. $251,242,293 243,907,561 98.4
------------
------------
0.0
VARIATION MARGIN ON STOCK INDEX FUTURES CONTRACTS**................... (99,903)
0.1
UNREALIZED APPRECIATION ON FORWARD FOREIGN EXCHANGE CONTRACTS***...... 300,276
1.5
OTHER ASSETS LESS LIABILITIES......................................... 3,775,841
------------ ----------
100.0%
NET ASSETS............................................................ $247,883,775
------------ ----------
------------ ----------
</TABLE>
70
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH VARIABLE SERIES FUNDS, INC.--INTERNATIONAL EQUITY FOCUS FUND
SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 1994 (CONCLUDED) (IN US DOLLARS)
- --------------------------------------------------------------------------------
<TABLE>
<C> <S>
(a) American Depositary Receipt (ADR).
(b) Global Depositary Shares (GDS).
(c) Warrants entitle the Fund to purchase a predetermined number of shares of common stock. The purchase price and the
number of shares are subject to adjustment under certain conditions until the expiration date.
(d) Restricted securities as to resale. The value of the Fund's investment in restricted securities was approximately
$6,053,000, representing 2.44% of net assets.
</TABLE>
<TABLE>
<CAPTION>
ACQUISITION VALUE
ISSUE DATE COST (NOTE 1A)
<S> <C> <C> <C>
Benpres Holdings Corp.......................................................... 10/25/1994 $ 421,200 $ 351,000
Hocheng Group Corp............................................................. 8/09/1994 2,149,131 1,673,100
Repola OY S.................................................................... 8/03/1993 568,828 610,585
Servicios Financieros Quadrum, S.A. de C.V. (ADR).............................. 11/02/1993 642,075 186,250
Svedala Industry............................................................... 10/28/1993 388,692 445,576
Telecomunicacoes Brasileiras S.A.--Telebras (ADR).............................. 10/08/1993 2,239,272 2,458,625
Usinas Siderurgicas de Minas Gerais--Usiminas S.A.............................. 10/05/1994 397,125 328,000
TOTAL.......................................................................... $ 6,806,323 $ 6,053,136
----------- -----------
----------- -----------
</TABLE>
<TABLE>
<C> <S>
(e) Non-income producing security.
+ All Topix 2nd Section OTCs are with Morgan Stanley & Co. International Ltd. as counterparty.
++ Represents the yield to maturity on this foreign discount security.
* Commercial Paper and certain US Government & Agency Obligations are traded on a discount basis; the interest rates
shown are the rates paid at the time of purchase by the Fund.
** Stock index futures contracts purchased as of December 31, 1994 were as follows:
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF EXPIRATION VALUE
CONTRACTS ISSUE EXCHANGE DATE (NOTE 1B)
<C> <S> <C> <C>
81 Nikkei 225.............................................................CME March 1995 $ 8,006,850
213 Nikkei 225...........................................................SIMEX March 1995 21,160,854
TOTAL STOCK INDEX FUTURES CONTRACTS PURCHASED (TOTAL CONTRACT PRICE--$28,472,945) $ 29,167,704
-------------
-------------
**Stock index futures contracts sold as of December 31, 1994 were as follows:
<CAPTION>
NUMBER OF EXPIRATION VALUE
CONTRACTS ISSUE EXCHANGE DATE (NOTE 1B)
<C> <S> <C> <C>
20 EOE....................................................................EOE January 1995 $ (957,904)
10 DAX....................................................................DTB March 1995 (1,363,049)
TOTAL STOCK INDEX FUTURES CONTRACTS SOLD (TOTAL CONTRACT PRICE--$2,304,772)................
$ (2,320,953)
-------------
-------------
The market value of pledged securities is $3,782,572.
</TABLE>
***Forward foreign exchange contracts as of December 31, 1994 were as follows:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
UNREALIZED
APPRECIATION
EXPIRATION (DEPRECIATION)
FOREIGN CURRENCY SOLD DATE (NOTE 1B)
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
DM 10,391,435......................................................................... March 1995 38,486
Nlg 7,098,115......................................................................... March 1995 11,821
Yen 397,200,000....................................................................... February 1995 (9,360)
Yen 1,400,572,500..................................................................... March 1995 191,837
Yen 1,263,080,000..................................................................... June 1995 74,003
Yen 155,480,000....................................................................... August 1995 (6,511)
- ------------------------------------------------------------------------------------------------------------------------
TOTAL UNREALIZED APPRECIATION ON FORWARD FOREIGN EXCHANGE CONTRACTS
(US$ COMMITMENT--$43,861,208)......................................................... $ 300,276
--------------
--------------
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
71
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH VARIABLE SERIES FUNDS, INC.--NATURAL RESOURCES FOCUS FUND
SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE PERCENT OF
INDUSTRY SHARES HELD COMMON STOCKS COST (NOTE 1A) NET ASSETS
<S> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
ALUMINUM 15,000 Alcan Aluminium Ltd.................. $ 314,175 $ 380,625 1.0
7,700 Reynolds Metals Co................... 349,628 377,300 0.9
663,803 757,925 1.9
- ------------------------------------------------------------------------------------------------------------------------
CHEMICALS 68,000 Asahi Chemical Industry Co., Ltd..... 502,124 522,131 1.3
10,400 Dow Chemical Co...................... 646,664 699,400 1.8
10,700 duPont (E.I.) de Nemours & Co........ 534,988 601,875 1.5
1,683,776 1,823,406 4.6
- ------------------------------------------------------------------------------------------------------------------------
DIVERSIFIED RESOURCES 19,000 Canadian Pacific Limited............. 302,765 285,000 0.7
COMPANIES 18,500 Coastal Corp......................... 493,653 476,375 1.2
30,000 Cyprus Amax Minerals Co.............. 843,290 783,750 2.0
4,800 Equitable Resources, Inc............. 118,772 130,200 0.3
24,000 Freeport-McMoran Inc................. 472,088 426,000 1.1
38,500 Norcen Energy Resources Ltd.......... 600,603 456,340 1.1
20,000 Occidental Petroleum Corp............ 391,200 385,000 1.0
43,000 Renison Goldfields Consolidated 171,823 163,335
Ltd.................................. 0.4
3,394,194 3,106,000 7.8
- ------------------------------------------------------------------------------------------------------------------------
GAS DISTRIBUTION/ 12,100 Consolidated Natural Gas Co.......... 586,109 429,550 1.1
TRANSMISSION
- ------------------------------------------------------------------------------------------------------------------------
GOLD 20,300 + Delta Gold NL........................ 43,832 44,377 0.1
175,000 Newcrest Mining Ltd.................. 816,087 780,045 2.0
15,864 Newmont Mining Corp.................. 664,211 571,104 1.4
35,000 Placer Dome Inc...................... 797,957 761,250 1.9
28,000 Santa Fe Pacific Gold Corp........... 413,022 360,500 0.9
2,735,109 2,517,276 6.3
- ------------------------------------------------------------------------------------------------------------------------
INTEGRATED OIL 10,500 Amoco Corp........................... 554,378 620,813 1.6
COMPANIES 8,500 Exxon Corp........................... 527,985 516,375 1.3
15,800 Imperial Oil Ltd..................... 576,846 521,400 1.3
17,900 Norsk Hydro a.s. (ADS)*.............. 471,629 700,337 1.8
39,000 Petro-Canada......................... 325,876 316,288 0.8
17,700 Phillips Petroleum Co................ 517,938 579,675 1.5
5,200 Royal Dutch Petroleum Co............. 452,860 559,000 1.4
12,000 Societe Nationale Elf Aquitaine 427,829 423,000
(ADS)*............................... 1.1
9,000 Total S.A. (Class B)................. 536,001 523,593 1.3
21,000 YPF S.A. (ADS)*...................... 523,296 448,875 1.1
4,914,638 5,209,356 13.2
- ------------------------------------------------------------------------------------------------------------------------
METAL & MINING 6,900 ASARCO Inc........................... 193,079 196,650 0.5
21,000 CRA Ltd.............................. 258,884 289,770 0.7
4,365 + Eramet............................... 287,729 282,432 0.7
31,500 + Falconbridge Ltd..................... 436,776 550,228 1.4
900 Freeport-McMoran Copper & Gold 21,338 19,125
Inc.................................. 0.0
283,000 M.I.M. Holdings Ltd.................. 618,436 471,670 1.2
43,500 Noranda Inc.......................... 835,357 821,867 2.1
10,000 Phelps Dodge Corp.................... 556,143 618,750 1.6
60,000 The RTZ Corp. PLC.................... 776,284 778,928 2.0
26,000 Trelleborg 'B' Fria.................. 353,318 380,404 1.0
134,000 Western Mining Corp. Holdings Ltd.... 784,884 774,921 2.0
5,122,228 5,184,745 13.2
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
72
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH VARIABLE SERIES FUNDS, INC.--NATURAL RESOURCES FOCUS FUND
SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 1994 (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE PERCENT OF
INDUSTRY SHARES HELD COMMON STOCKS COST (NOTE 1A) NET ASSETS
<S> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
OIL & GAS PRODUCERS 104,000 Ampolex Ltd.......................... $ 325,645 $ 280,560 0.7%
10,500 Anadarko Petroleum Corp.............. 513,411 404,250 1.0
18,000 Apache Corp.......................... 482,356 450,000 1.1
13,500 Burlington Resources Inc............. 528,438 472,500 1.2
24,000 Enron Oil & Gas Co................... 514,140 450,000 1.1
65,000 Enterprise Oil PLC................... 418,650 398,762 1.0
13,000 Oryx Energy Co....................... 216,739 154,375 0.4
63,000 Ranger Oil Ltd....................... 416,247 370,125 0.9
15,000 Sonat Inc............................ 477,890 420,000 1.1
7,100 The Louisiana Land and Exploration 282,233 258,262
Co................................... 0.6
9,000 + Triton Energy Corp................... 293,016 306,000 0.8
9,800 Vastar Resources Inc................. 268,604 243,775 0.6
4,737,369 4,208,609 10.5
- ------------------------------------------------------------------------------------------------------------------------
OIL SERVICE 16,800 Baker Hughes, Inc.................... 322,264 306,600 0.8
8,000 + Coflexip............................. 172,000 184,000 0.5
18,000 IHC Caland........................... 400,101 455,920 1.1
64,400 Rowan Companies Inc.................. 602,479 394,450 1.0
11,400 Schlumberger Ltd..................... 693,409 574,275 1.4
13,400 Tidewater Inc........................ 271,679 247,900 0.6
2,461,932 2,163,145 5.4
- ------------------------------------------------------------------------------------------------------------------------
PAPER & FOREST 18,400 Aracruz Celulose A.S. (ADS)*......... 196,788 234,600 0.6
PRODUCTS 10,000 Georgia-Pacific Corp................. 710,723 715,000 1.8
7,400 International Paper.................. 497,368 557,775 1.4
9,800 Metsa-Serla OY 'B'................... 424,632 430,997 1.1
6,700 Mo Och Domsjo AB Co.................. 269,783 312,603 0.8
12,000 Scott Paper Co....................... 479,340 829,500 2.1
12,200 Union Camp Corp...................... 530,591 574,925 1.4
20,000 Weyerhaeuser Co...................... 796,864 750,000 1.9
9,000 Willamette Industries Inc............ 376,875 423,000 1.1
4,282,964 4,828,400 12.2
- ------------------------------------------------------------------------------------------------------------------------
PLANTATIONS 86,000 Golden Hope Plantations BHD.......... 158,974 157,007 0.4
60,000 Kuala Lumpur Kepong BHD.............. 120,553 159,843 0.4
279,527 316,850 0.8
- ------------------------------------------------------------------------------------------------------------------------
POWER GENERATION 33,100 + Destec Energy Inc.................... 562,619 351,687 0.9
- ------------------------------------------------------------------------------------------------------------------------
REFINING 22,300 Total Petroleum (North America), 328,442 278,750
Ltd.................................. 0.7
- ------------------------------------------------------------------------------------------------------------------------
STEEL 21,000 Allegheny Ludlum Corp................ 493,494 393,750 1.0
4,600 + Koninklijke Nederlandsche Hoogovens
en Staalfabrieken N.V................ 196,722 209,139 0.5
150,000 + Sumimoto Metal Industries, Ltd....... 497,497 486,935 1.2
1,187,713 1,089,824 2.7
- ------------------------------------------------------------------------------------------------------------------------
WOOD PRODUCTS 18,000 Louisiana-Pacific Corp............... 689,580 490,500 1.2
- ------------------------------------------------------------------------------------------------------------------------
TOTAL COMMON STOCKS 33,630,003 32,756,023 82.5
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
73
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH VARIABLE SERIES FUNDS, INC.--NATURAL RESOURCES FOCUS FUND
SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 1994 (CONCLUDED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE VALUE PERCENT OF
AMOUNT SHORT-TERM SECURITIES COST (NOTE 1A) NET ASSETS
<S> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
COMMERCIAL PAPER** $1,733,000 General Electric Capital Corp., 5.80% $ 1,731,883 $ 1,731,883
due 1/03/1995........................ 4.4%
- ------------------------------------------------------------------------------------------------------------------------
US GOVERNMENT & AGENCY 5,000,000 US Treasury Bills, 4.85% due 4,967,667 4,967,667
OBLIGATIONS** 2/16/1995............................ 12.5
- ------------------------------------------------------------------------------------------------------------------------
TOTAL SHORT-TERM SECURITIES 6,699,550 6,699,550 16.9
- ------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS.................... $ 40,329,553 39,455,573 99.4
------------
------------
OTHER ASSETS LESS LIABILITIES........ 259,288 0.6
NET ASSETS........................... $ 39,714,861 100.0%
------------ ----------
------------ ----------
- ------------------------------------------------------------------------------------------------------------------------
* American Depositary Shares (ADS).
** 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 Fund.
+ Non-income producing security.
</TABLE>
See Notes to Financial Statements.
74
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH VARIABLE SERIES FUNDS, INC.--PRIME BOND FUND
SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
S&P MOODY'S FACE VALUE
INDUSTRY RATINGS RATINGS AMOUNT ISSUE COST (NOTE 1A)
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
CORPORATE BONDS & NOTES
- ------------------------------------------------------------------------------------------------------------------------
BANKS & THRIFTS--9.5% A+ Aa3 $ 8,000,000 Boatmen's Bancshares, Inc., 4.34%
due 6/14/1995................... $ 8,000,000 $ 7,991,376
A- A2 6,000,000 Comerica Inc., 8.375% due
7/15/2024....................... 5,706,180 5,574,600
A- A3 3,000,000 First Interstate Bancorp, 11.00%
due 3/05/1998................... 3,605,145 3,191,280
A- A3 5,000,000 First Union Corp., 8.125% due
6/24/2002....................... 5,541,690 4,861,700
Golden West Financial Corp.:
A- A3 2,000,000 9.15% due 5/23/1998............... 2,271,480 2,047,480
A- A3 2,000,000 8.375% due 4/15/2002.............. 2,014,380 1,971,980
A- A3 1,000,000 Huntington National Bank, 7.625%
due 1/15/2003................... 1,066,660 945,560
A- A3 6,500,000 NationsBank Corp., 10.50% due
3/15/1999....................... 6,808,555 6,678,750
AA+ Aa2 5,000,000 Wachovia Bank, 6.55% due
6/09/1997....................... 4,996,350 4,839,650
------------- ------------
40,010,440 38,102,376
- ------------------------------------------------------------------------------------------------------------------------
FINANCIAL SERVICES--
CAPTIVE--3.3% Chrysler Finance Corp.:
A A3 1,000,000 7.13% due 9/30/1996............... 985,130 984,340
BBB+ A3 2,500,000 9.50% due 12/15/1999.............. 2,747,175 2,593,900
BBB+ A3 6,500,000 10.95% due 8/01/2017.............. 7,380,520 7,136,805
A A2 2,115,000 Ford Motor Credit Corp., 7.75% due
11/15/2002...................... 2,161,943 2,016,927
------------- ------------
13,274,768 12,731,972
- ------------------------------------------------------------------------------------------------------------------------
FINANCIAL SERVICES-- A+ A1 2,000,000 American General Finance Corp.,
CONSUMER--7.7% 8.50% due 8/15/1998............. 2,278,920 2,006,000
Associates Corp. of North America:
AA- A1 5,000,000 8.375% due 1/15/1998.............. 5,016,100 4,999,950
AA- A1 1,500,000 8.80% due 8/01/1998............... 1,690,365 1,513,560
AA- A1 1,000,000 8.25% due 12/01/1999.............. 996,740 994,150
A A2 10,000,000 Beneficial Corp., 6.68% due
10/14/1997...................... 10,000,000 9,994,000
A+ Aa3 3,000,000 CIT Group Holdings, Inc., 7.625%
due
12/05/1996...................... 2,990,340 2,980,500
Commercial Credit Co.:
A A2 3,250,000 10.00% due 5/01/1999.............. 3,626,350 3,403,043
A A2 3,000,000 6.70% due 8/01/1999............... 3,022,580 2,800,080
A+ A2 1,000,000 Transamerica Financial Corp.,
6.80% due 3/15/1999............. 999,730 941,660
------------- ------------
30,621,125 29,632,943
- ------------------------------------------------------------------------------------------------------------------------
FINANCIAL SERVICES--
OTHER--9.3% Dean Witter, Discover & Co.:
A A2 5,000,000 6.50% due 11/01/2005.............. 4,942,250 4,246,300
A A2 4,750,000 6.75% due 10/15/2013.............. 4,691,575 3,866,785
A+ A2 2,000,000 Dillard Investment Co., 9.25%
due 2/01/2001................... 2,354,230 2,066,040
General Electric Capital Corp.:
AAA Aaa 3,000,000 14.00% due 7/01/1996.............. 3,405,570 3,256,020
AAA Aaa 3,500,000 8.125% due 5/15/2012.............. 3,553,725 3,438,750
A A3 10,000,000 Lehman Brothers Holdings, Inc.,
7.375% due 8/15/1997............ 9,987,000 9,693,800
PaineWebber Group, Inc.:
BBB+ A3 1,000,000 6.25% due 6/15/1998............... 1,026,020 919,610
BBB+ A3 4,000,000 9.25% due 12/15/2001.............. 4,670,870 4,041,360
A- A3 4,000,000 Smith Barney Holdings, 7.875% due
10/01/1999...................... 3,986,160 3,889,920
A+ A2 1,000,000 The Travelers Corp., 9.50% due
3/01/2002....................... 1,084,200 1,047,940
------------- ------------
39,701,600 36,466,525
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
75
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH VARIABLE SERIES FUNDS, INC.--PRIME BOND FUND
SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 1994 (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
S&P MOODY'S FACE VALUE
INDUSTRY RATINGS RATINGS AMOUNT ISSUE COST (NOTE 1A)
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
CORPORATE BONDS & NOTES
- ------------------------------------------------------------------------------------------------------------------------
FOREIGN*--11.4% AA- A1 $ 4,000,000 Aegon N.V., 8.00% due 8/15/2006
(5)............................. $ 3,963,480 $ 3,832,680
CRA Finance Ltd. (4):
A+ A2 3,000,000 6.50% due 12/01/2003.............. 3,001,380 2,626,290
A+ A2 3,000,000 7.125% due 12/01/2013............. 2,982,600 2,560,680
AAA Aaa 2,000,000 Export-Import Bank of Japan, 8.35%
due 12/01/1999 (2).............. 2,113,320 2,016,600
A A3 5,413,000 Hydro-Quebec, 10.75% due
6/15/2010 (1)................... 5,959,821 5,687,439
Metropolis of Tokyo (Japan) (3):
AAA Aaa 3,000,000 8.70% due 10/05/1999.............. 3,469,410 3,064,620
AAA Aaa 250,000 9.25% due 11/08/2000.............. 268,428 261,510
AAA Aaa 2,000,000 8.65% due 7/18/2001............... 2,288,720 2,038,800
Province of Ontario (Canada) (3):
AA Aa2 5,000,000 8.00% due 10/17/2001.............. 5,082,900 4,928,900
AA Aa2 6,000,000 7.75% due 6/04/2002............... 5,917,560 5,795,580
Province of Quebec (Canada) (3):
A+ A1 1,000,000 8.80% due 4/15/2003............... 1,038,020 1,009,410
A+ A1 9,000,000 7.125% due 2/09/2024.............. 7,384,440 7,231,860
AA A1 3,000,000 Republic of Italy, 6.875% due
9/27/2023 (3)................... 2,898,730 2,363,160
------------- ------------
46,368,809 43,417,529
- ------------------------------------------------------------------------------------------------------------------------
INDUSTRIAL--CONSUMER
GOODS--9.0% Anheuser-Busch Cos., Inc.:
AA- A1 2,500,000 8.75% due 12/01/1999.............. 2,839,090 2,551,350
AA- A1 5,000,000 7.375% due 7/01/2023.............. 5,127,300 4,343,750
A+ A1 2,500,000 Bass America, Inc., 8.125% due
3/31/2002....................... 2,668,930 2,458,250
Dillard Department Stores, Inc.:
A+ A2 5,000,000 7.375% due 6/15/1999.............. 5,305,840 4,825,200
A+ A2 3,000,000 9.125% due 8/01/2011.............. 3,240,150 3,146,040
Grand Metropolitan Investment
Corp.:
A+ A2 5,500,000 6.50% due 9/15/1999............... 5,615,810 5,113,295
A+ A2 1,000,000 8.625% due 8/15/2001.............. 1,049,910 1,006,640
AAA Aaa 3,000,000 Johnson & Johnson Co., 8.72% due
11/01/2024...................... 3,000,000 3,035,130
A A1 1,000,000 PepsiCo, Inc., 6.125% due
1/15/1998....................... 993,060 944,290
A A2 4,000,000 Philip Morris Corp. Inc., 9.00%
due 1/01/2001................... 4,071,540 4,048,360
AA Aa1 4,000,000 Wal-Mart Stores, Inc., 8.50% due
9/15/2024....................... 3,926,560 3,911,280
------------- ------------
37,838,190 35,383,585
- ------------------------------------------------------------------------------------------------------------------------
INDUSTRIAL--ENERGY--
4.0% BP America Inc.:
A+ Aa3 1,000,000 9.50% due 1/01/1998............... 1,169,680 1,029,790
A+ Aa3 4,865,000 9.375% due 11/01/2000............. 5,363,565 5,104,601
AA- A1 5,500,000 7.875% due 5/15/2002.............. 5,972,510 5,376,910
Texaco Capital Inc.:
A+ A1 1,500,000 9.00% due 12/15/1999.............. 1,731,670 1,542,975
A+ A1 1,000,000 8.875% due 2/15/2021.............. 999,860 1,048,440
A+ A1 1,000,000 8.625% due 11/15/2031............. 1,045,390 993,930
------------- ------------
16,282,675 15,096,646
- ------------------------------------------------------------------------------------------------------------------------
INDUSTRIAL--OTHER--5.8% AA- Aa2 2,000,000 Archer-Daniels-Midland Co., 8.875%
due 4/15/2011................... 2,159,000 2,079,680
AA- A1 5,000,000 Capital Cities/ABC, Inc., 8.875%
due 12/15/2000.................. 5,846,030 5,124,500
A- A3 1,000,000 Carnival Cruise Lines, Inc., 6.15%
due 10/01/2003.................. 891,530 853,840
AA+ Aa1 2,000,000 Ford Motor Credit Company, 9.50%
due 6/01/2010................... 2,217,880 2,113,320
</TABLE>
76
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH VARIABLE SERIES FUNDS, INC.--PRIME BOND FUND
SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 1994 (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
S&P MOODY'S FACE VALUE
INDUSTRY RATINGS RATINGS AMOUNT ISSUE COST (NOTE 1A)
- --------------------------------------------------------------------------------
CORPORATE BONDS & NOTES
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
INDUSTRIAL--OTHER
(CONCLUDED) A- A3 $ 6,250,000 International Paper Co., 9.70% due
3/15/2000....................... $ 7,418,447 $ 6,595,750
AA Aa2 5,890,000 Kaiser Foundation Hospital, 9.55%
due 7/15/2005................... 6,625,366 6,325,035
------------- ------------
25,158,253 23,092,125
- ------------------------------------------------------------------------------------------------------------------------
SUPRANATIONAL--5.3% Asian Development Bank:
AAA Aaa 1,000,000 10.75% due 6/01/1997.............. 1,084,890 1,055,610
AAA Aaa 3,000,000 8.50% due 5/02/2001............... 3,224,400 3,039,870
European Investment Bank:
AAA Aaa 2,000,000 8.875% due 3/01/2001.............. 2,380,320 2,061,020
AAA Aaa 5,000,000 9.125% due 6/01/2002.............. 6,147,500 5,246,450
Inter-American Development Bank
Co.:
AAA Aaa 2,000,000 8.875% due 6/01/2009.............. 2,481,700 2,117,000
AAA Aaa 4,000,000 8.50% due 3/15/2011............... 4,910,200 4,070,320
AAA Aaa 3,000,000 International Bank for
Reconstruction & Development,
12.375% due 10/15/2002.......... 3,817,430 3,692,850
------------- ------------
24,046,440 21,283,120
- ------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION
SERVICES--5.2% AA A1 9,500,000 Boeing Co. (The), 6.35% due
6/15/2003....................... 8,549,905 8,362,945
A A2 3,640,000 Conrail Inc., 9.75% due
6/01/2000....................... 4,047,134 3,823,856
Southwest Airlines, Inc.:
A- Baa1 3,500,000 9.40% due 7/01/2001............... 4,021,990 3,629,990
A- Baa1 4,000,000 8.75% due 10/15/2003.............. 4,417,060 4,054,000
A- Baa1 1,000,000 7.875% due 9/01/2007.............. 992,600 935,530
------------- ------------
22,028,689 20,806,321
- ------------------------------------------------------------------------------------------------------------------------
UTILITIES--
COMMUNICATIONS--1.3% GTE Corp.:
BBB+ A3 1,000,000 8.85% due 3/01/1998............... 1,143,360 1,009,580
BBB+ Baa1 1,000,000 9.10% due 6/01/2003............... 1,221,680 1,024,850
AA- Aa3 2,000,000 Pacific Bell, Inc., 8.70% due
6/15/2001....................... 2,293,800 2,039,200
A+ A1 1,000,000 Southwestern Bell
Telecommunications Corp., 6.125%
due 3/01/2000................... 1,005,000 913,890
------------- ------------
5,663,840 4,987,520
- ------------------------------------------------------------------------------------------------------------------------
UTILITIES--ELECTRIC--4.6% AA- Aa2 7,000,000 Duke Power Co., 8.00% due
11/01/1999...................... 6,966,520 6,957,440
A- A3 3,000,000 Georgia Power Co., 6.125% due
9/01/1999....................... 2,892,720 2,767,770
A A2 1,000,000 Pennsylvania Power & Light Co.,
7.75% due 5/01/2002............. 995,100 960,400
A A2 7,500,000 Virginia Electric & Power Co.,
8.625% due 10/01/2024........... 7,416,540 7,396,028
------------- ------------
18,270,880 18,081,638
- ------------------------------------------------------------------------------------------------------------------------
UTILITIES--GAS--1.8% AA- A1 7,000,000 Consolidated Natural Gas Co.,
8.75% due 6/01/1999............. 7,448,861 7,089,880
- ------------------------------------------------------------------------------------------------------------------------
TOTAL CORPORATE BONDS & NOTES--
78.2% 326,714,570 306,172,180
- ------------------------------------------------------------------------------------------------------------------------
US GOVERNMENT & AGENCY OBLIGATIONS
- ------------------------------------------------------------------------------------------------------------------------
NR+ Aaa 5,000,000 Federal Home Loan Bank, 5.00% due
FEDERAL AGENCY 5/06/1996.......................
OBLIGATIONS--4.4% 4,980,500 4,989,950
Federal National Mortgage
Association:
NR+ Aaa 7,000,000 7.85% due 9/10/2004............... 6,925,569 6,715,590
NR+ Aaa 2,000,000 8.25% due 10/12/2004.............. 1,975,937 1,963,120
NR+ Aaa 3,500,000 8.55% due 12/10/2004.............. 3,497,266 3,469,375
------------- ------------
17,379,272 17,138,035
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
77
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH VARIABLE SERIES FUNDS, INC.--PRIME BOND FUND
SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 1994 (CONCLUDED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
S&P MOODY'S FACE VALUE
RATINGS RATINGS AMOUNT ISSUE COST (NOTE 1A)
- --------------------------------------------------------------------------------
US GOVERNMENT OBLIGATIONS
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
US GOVERNMENT US Treasury Notes & Bonds:
OBLIGATIONS--7.3% AAA Aaa $ 2,500,000 8.75% due 8/15/2000............... $ 2,976,172 $ 2,602,350
AAA Aaa 9,500,000 7.875% due 11/15/2004............. 9,440,785 9,526,695
AAA Aaa 2,000,000 7.50% due 11/15/2016.............. 2,219,480 1,898,120
AAA Aaa 1,000,000 8.125% due 8/15/2021.............. 1,227,187 1,016,870
AAA Aaa 14,000,000 7.50% due 11/15/2024.............. 13,688,151 13,391,840
------------- ------------
29,551,775 28,435,875
- ------------------------------------------------------------------------------------------------------------------------
TOTAL US GOVERNMENT OBLIGATIONS--
11.7% 46,931,047 45,573,910
- ------------------------------------------------------------------------------------------------------------------------
SHORT-TERM SECURITIES
- ------------------------------------------------------------------------------------------------------------------------
COMMERCIAL PAPER**--6.5% 12,000,000 American Express Credit Corp.,
5.875% due 1/03/1995............ 11,992,167 11,992,167
13,300,000 General Electric Capital Corp.,
5.25% due 1/06/1995............. 13,286,423 13,286,423
------------- ------------
25,278,590 25,278,590
- ------------------------------------------------------------------------------------------------------------------------
REPURCHASE 1,698,000 UBS Securities Funding Inc.,
AGREEMENT***--2.0% purchased on 12/30/1994 to yield
3.50% to 1/03/1995.............. 1,698,000 1,698,000
6,077,000 UBS Securities Funding Inc.,
purchased on 12/30/1994 to yield
5.75% to 1/03/1995.............. 6,077,000 6,077,000
------------- ------------
7,775,000 7,775,000
- ------------------------------------------------------------------------------------------------------------------------
TOTAL SHORT-TERM SECURITIES--8.5% 33,053,590 33,053,590
- ------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS--98.4%.......... $ 406,699,207 384,799,680
-------------
-------------
OTHER ASSETS LESS LIABILITIES--
1.6%............................ 6,434,495
------------
NET ASSETS--100.0%................ $391,234,175
------------
------------
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<C> <S>
* Corresponding industry groups for foreign securities, which are denominated in US dollars.
(1) Electric Utility
(2) Financial Institution
(3) Government Entity
(4) Industrial Mining
(5) Insurance
** Commercial Paper is traded on a discount basis and amortized to maturity. The interest rate shown is the discount
rate paid at the time of purchase by the Fund.
*** Repurchase Agreements are fully collateralized by US Government Obligations.
+ Not Rated.
</TABLE>
Ratings of issues shown have not been audited by Deloitte & Touche LLP.
See Notes to Financial Statements.
78
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH VARIABLE SERIES FUNDS, INC.--QUALITY EQUITY FUND
SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE PERCENT OF
INDUSTRY HELD COMMON STOCKS & WARRANTS COST (NOTE 1A) NET ASSETS
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
ALUMINUM 45,000 Aluminum Co. of America.............. $ 3,824,580 $ 3,898,125 0.8%
- ------------------------------------------------------------------------------------------------------------------------
APPLIANCES 395,300 Singer Co., N.V...................... 13,068,067 11,809,588 2.5
550,000 Sunbeam-Oster Inc.................... 11,293,706 14,162,500 3.1
------------- ------------- ----------
24,361,773 25,972,088 5.6
- ------------------------------------------------------------------------------------------------------------------------
AUTO & TRUCK 30,000 Consorcio G Grupo Dina S.A. de C.V.
(ADR) (a).......................... 577,769 285,000 0.1
- ------------------------------------------------------------------------------------------------------------------------
BANKING 60,000 + Bank of New York Co. (Warrants)
(b)................................ 433,750 577,500 0.1
220,000 Bank of New York, Inc................ 6,267,283 6,380,000 1.4
175,000 BankAmerica Corp..................... 8,029,172 6,912,500 1.5
207,000 Espirito Santo Financial Holdings
S.A. (ADR) (a)..................... 2,944,953 2,768,625 0.6
------------- ------------- ----------
17,675,158 16,638,625 3.6
- ------------------------------------------------------------------------------------------------------------------------
BEVERAGES 39,000 Panamerican Beverage, Inc. (Class
A)................................. 1,418,965 1,233,375 0.3
- ------------------------------------------------------------------------------------------------------------------------
CHEMICALS 133,000 du Pont (E.I.) de Nemours & Co....... 7,786,636 7,481,250 1.6
238,100 Eastman Chemical Co.................. 12,207,346 12,024,050 2.6
150,000 IMC Global Inc....................... 5,797,935 6,487,500 1.4
100,000 Rohm and Haas Co..................... 5,741,215 5,712,500 1.2
------------- ------------- ----------
31,533,132 31,705,300 6.8
- ------------------------------------------------------------------------------------------------------------------------
COMMUNICATION
EQUIPMENT 350,000 ADC Telecommunications Inc........... 12,373,105 17,325,000 3.7
315,000 DSC Communications Corp.............. 7,527,792 11,340,000 2.5
75,000 Motorola, Inc........................ 3,879,432 4,340,625 0.9
85,000 Tellabs, Inc......................... 2,227,494 4,717,500 1.0
------------- ------------- ----------
26,007,823 37,723,125 8.1
- ------------------------------------------------------------------------------------------------------------------------
COMPUTER SERVICES 385,000 Computer Sciences Corp............... 12,262,440 19,635,000 4.2
65,000 General Motors Corp. (Class E)....... 2,552,056 2,502,500 0.5
------------- ------------- ----------
14,814,496 22,137,500 4.7
- ------------------------------------------------------------------------------------------------------------------------
COMPUTER EQUIPMENT 35,000 International Business Machines
Corp............................... 2,486,568 2,572,500 0.6
220,000 + Solectron Corp....................... 5,164,478 6,050,000 1.3
------------- ------------- ----------
7,651,046 8,622,500 1.9
- ------------------------------------------------------------------------------------------------------------------------
CONSUMER-- 100,000 Duracell International, Inc.......... 4,202,024 4,337,500 0.9
MISCELLANEOUS
- ------------------------------------------------------------------------------------------------------------------------
CONSUMER--SERVICES 200,000 Block (H & R), Inc................... 8,204,393 7,425,000 1.6
- ------------------------------------------------------------------------------------------------------------------------
DRUG STORES 50,000 + Revco D.S., Inc. 1,158,190 1,181,250 0.3
- ------------------------------------------------------------------------------------------------------------------------
ELECTRICAL EQUIPMENT 215,000 Grainger (W.W.) Inc.................. 13,189,353 12,416,250 2.7
- ------------------------------------------------------------------------------------------------------------------------
ENERGY RELATED 350,000 + California Energy Co., Inc........... 6,491,715 5,468,750 1.2
- ------------------------------------------------------------------------------------------------------------------------
ENGINEERING & 135,000 + Empresas ICA Sociedad Controladora,
CONSTRUCTION S.A. de C.V. (ADR) (a)............. 3,612,410 2,092,500 0.4
- ------------------------------------------------------------------------------------------------------------------------
ENVIRONMENTAL CONTROL 775,000 + Wheelabrator Technologies, Inc....... 13,330,204 11,431,250 2.5
- ------------------------------------------------------------------------------------------------------------------------
FOREIGN--AUSTRALIA 130,000 News Corp., Ltd. (ADR) (a) (8)....... 2,733,083 2,031,250 0.4
65,000 News Corp., Ltd. (Preferred) (ADR)
(a) (8)............................ 839,808 901,875 0.2
------------- ------------- ----------
3,572,891 2,933,125 0.6
- ------------------------------------------------------------------------------------------------------------------------
FOREIGN--CANADA 180,000 NOVA Corp. (2)....................... 1,891,620 1,665,000 0.4
- ------------------------------------------------------------------------------------------------------------------------
FOREIGN--CHILE 39,000 + Banco O'Higgins (ADR) (a) (9)........ 581,650 667,875 0.1
- ------------------------------------------------------------------------------------------------------------------------
FOREIGN--DENMARK 40,000 + Tele Danmark A/S (ADR) (a) (7)....... 941,040 1,020,000 0.2
- ------------------------------------------------------------------------------------------------------------------------
FOREIGN--ITALY 30,000 Istituto Mobiliare Italiano S.p.A.
(ADR)
(a) (9)............................ 664,580 551,250 0.1
- ------------------------------------------------------------------------------------------------------------------------
FOREIGN--MEXICO 125,000 Grupo Financiero Serfin, S.A. de C.V.
(ADR) (a) (9)...................... 3,216,645 937,500 0.2
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
79
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH VARIABLE SERIES FUNDS, INC.--QUALITY EQUITY FUND
SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 1994 (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE PERCENT OF
INDUSTRY HELD COMMON STOCKS & WARRANTS COST (NOTE 1A) NET ASSETS
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
FOREIGN--
UNITED KINGDOM 30,220 British Petroleum PLC (ADR) (a)
(6)................................ $ 2,239,380 $ 2,413,822 0.5%
35,000 Hanson PLC (ADR) (a) (5)............. 774,681 630,000 0.1
80,000 Reuters Holdings PLC (ADR) (a) (1)... 2,583,407 3,510,000 0.8
------------- ------------- ----------
5,597,468 6,553,822 1.4
- ------------------------------------------------------------------------------------------------------------------------
HEALTHCARE 550,000 + Humana Inc........................... 10,126,201 12,443,750 2.7
260,000 Physician Corp....................... 5,391,368 5,265,000 1.1
50,000 Vivra Inc............................ 965,297 1,400,000 0.3
------------- ------------- ----------
16,482,866 19,108,750 4.1
- ------------------------------------------------------------------------------------------------------------------------
HOUSEHOLD PRODUCTS 220,000 Procter & Gamble Co.................. 11,868,180 13,640,000 2.9
- ------------------------------------------------------------------------------------------------------------------------
INSURANCE 177,100 ITT Corp............................. 15,055,943 15,695,488 3.4
- ------------------------------------------------------------------------------------------------------------------------
MULTI-INDUSTRY 100,000 Allied Signal Inc.................... 3,616,074 3,400,000 0.7
- ------------------------------------------------------------------------------------------------------------------------
OFFICE EQUIPMENT 650,000 Danka Business Systems PLC (ADR)
(a)................................ 10,368,086 13,893,750 3.0
- ------------------------------------------------------------------------------------------------------------------------
OIL--INTEGRATED 165,000 Mobil Corp........................... 12,823,266 13,901,250 3.0
150,000 Phillips Petroleum Co................ 5,106,545 4,912,500 1.1
80,000 Royal Dutch Petroleum Co. N.V. (ADR)
(a)................................ 8,236,860 8,600,000 1.9
------------- ------------- ----------
26,166,671 27,413,750 6.0
- ------------------------------------------------------------------------------------------------------------------------
PACKAGING 120,000 Crown Cork & Seal Co., Inc........... 4,427,472 4,530,000 1.0
- ------------------------------------------------------------------------------------------------------------------------
PHARMACEUTICALS 70,000 American Home Products Corp.......... 4,364,147 4,392,500 0.9
325,000 Merck & Co., Inc..................... 11,818,350 12,390,625 2.7
------------- ------------- ----------
16,182,497 16,783,125 3.6
- ------------------------------------------------------------------------------------------------------------------------
PHOTOGRAPHY 110,000 Eastman Kodak Co..................... 5,427,692 5,252,500 1.1
- ------------------------------------------------------------------------------------------------------------------------
RAILROADS 405,000 + Southern Pacific Rail Corp........... 8,405,529 7,340,625 1.6
- ------------------------------------------------------------------------------------------------------------------------
RETAIL 95,000 Phillips-Van Heusen Corp............. 2,715,283 1,448,750 0.3
- ------------------------------------------------------------------------------------------------------------------------
SOAP 25,000 Unilever N.V. (ADR) (a).............. 2,900,362 2,912,500 0.6
- ------------------------------------------------------------------------------------------------------------------------
TIRES & RUBBER 50,000 Cooper Tire & Rubber Co.............. 1,313,940 1,181,250 0.3
- ------------------------------------------------------------------------------------------------------------------------
UTILITIES--
COMMUNICATIONS 60,000 + ALC Communications Corp.............. 1,797,300 1,867,500 0.4
200,000 GTE Corp............................. 6,392,691 6,075,000 1.3
500,000 LDDS Communications Inc.............. 10,793,071 9,687,500 2.1
340,000 MCI Communications Corp.............. 9,152,123 6,247,500 1.3
180,000 + Southwestern Bell Corp............... 7,664,078 7,267,500 1.6
110,000 Telefonos de Mexico, S.A. de C.V.
(ADR) (a).......................... 6,696,820 4,510,000 1.0
------------- ------------- ----------
42,496,083 35,655,000 7.7
- ------------------------------------------------------------------------------------------------------------------------
TOTAL COMMON STOCKS & WARRANTS 361,945,603 375,152,198 80.8
- ------------------------------------------------------------------------------------------------------------------------
FACE AMOUNT SHORT-TERM SECURITIES
- ------------------------------------------------------------------------------------------------------------------------
COMMERCIAL PAPER* 10,000,000 Ciesco L.P., 5.60% due 1/05/1995.... 9,990,667 9,990,667 2.1
5,000,000 Corporate Receivables Corp., 6.00%
due 1/10/1995..................... 4,990,833 4,990,833 1.1
19,806,000 General Electric Capital Corp.,
5.80% due 1/03/1995............... 19,793,236 19,793,236 4.3
5,000,000 Heinz (H.J.) Co., 5.65% due
1/09/1995......................... 4,992,222 4,992,222 1.1
12,000,000 IBM Credit Corp., 5.78% due
1/19/1995......................... 11,961,800 11,961,800 2.6
10,103,000 Premium Funding, Inc., 6.12% due
2/06/1995......................... 10,037,735 10,037,735 2.1
10,000,000 USL Capital Corp., 6.05% due
1/23/1995......................... 9,959,667 9,959,667 2.1
------------- ------------- ----------
71,726,160 71,726,160 15.4
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
80
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH VARIABLE SERIES FUNDS, INC.--QUALITY EQUITY FUND
SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 1994 (CONCLUDED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE VALUE PERCENT OF
AMOUNT SHORT-TERM SECURITIES COST (NOTE 1A) NET ASSETS
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
US GOVERNMENT & $ 11,000,000 Federal Home Loan Bank, 5.72% due
AGENCY OBLIGATION* 1/17/1995......................... $ 10,968,760 $ 10,968,760 2.4%
7,000,000 Federal National Mortgage
Association, 5.77% due
1/27/1995......................... 6,968,585 6,968,585 1.5
------------- ------------- ----------
17,937,345 17,937,345 3.9
- ------------------------------------------------------------------------------------------------------------------------
TOTAL SHORT-TERM SECURITIES 89,663,505 89,663,505 19.3
- ------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS 451,609,108 464,815,703 100.1
- ------------------------------------------------------------------------------------------------------------------------
OPTIONS SHARES PREMIUMS
WRITTEN COVERED ISSUE RECEIVED
- ------------------------------------------------------------------------------------------------------------------------
CALL OPTIONS WRITTEN 8,700 ADC Telecommunications Inc.,
expiring January 1995 at US$ 50... (10,976) (9,788) 0.0
20,000 ITT Corp., expiring January 1995 at
US$ 90............................ (24,191) (22,500) 0.0
------------- ------------- ----------
(35,167) (32,288) 0.0
- ------------------------------------------------------------------------------------------------------------------------
TOTAL OPTIONS WRITTEN (35,167) (32,288) 0.0
- ------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS, NET OF OPTIONS WRITTEN.............. $ 451,573,941 464,783,415 100.1
-------------
-------------
LIABILITIES IN EXCESS OF OTHER ASSETS.................. (423,533) (0.1)
------------- ----------
NET ASSETS............................................. $ 464,359,882 100.0%
------------- ----------
------------- ----------
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
(a) American Depositary Receipt (ADR).
(b) Warrants entitle the Fund to purchase a predetermined number of shares of common stock. The purchase price and number
of shares are subject to adjustments under certain conditions until the expiration date.
* 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 Fund.
+ Non-income producing security.
</TABLE>
Corresponding industry groups for foreign securities:
<TABLE>
<S> <C> <C> <C>
(1) Business Services (6) Petroleum
(2) Chemicals (7) Telecommunications
(3) Financial Services (8) Media-Publishing
(4) Food-Processing (9) Banking
(5) Multi-Industry (10) Soap
</TABLE>
See Notes to Financial Statements.
81
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH VARIABLE SERIES FUNDS, INC.--RESERVE ASSETS FUND
SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE INTEREST MATURITY VALUE
AMOUNT ISSUE RATE* DATE (NOTE 1A)
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
BANK NOTES--3.1% $1,000,000 PNC Bank N.A..................................... 5.15 % 2/22/95 $ 998,406
- ------------------------------------------------------------------------------------------------------------------------
TOTAL BANK NOTES (COST--$999,900) 998,406
- ------------------------------------------------------------------------------------------------------------------------
COMMERCIAL
PAPER--57.6% 1,500,000 ABN-AMRO North American Finance Inc.............. 5.42 1/04/95 1,498,854
500,000 ANZ (Delaware), Inc.............................. 5.05 1/20/95 498,338
1,000,000 Abbey National N.A. Corp......................... 5.075 3/02/95 989,322
1,500,000 Allomon Funding Corp............................. 5.80 1/17/95 1,495,650
500,000 Avco Financial Services, Inc..................... 5.68 2/14/95 496,167
204,000 BTR Dunlop Finance, Inc.......................... 5.50 1/23/95 203,218
500,000 Bankers Trust New York Corp...................... 5.41 1/27/95 497,764
1,000,000 Bankers Trust New York Corp...................... 5.58 4/12/95 981,975
500,000 Cheltenham & Glouster Building Society........... 5.08 3/09/95 494,058
1,300,000 Deer Park Refining L.P........................... 6.10 1/19/95 1,295,594
500,000 Ford Motor Credit Co............................. 5.42 1/11/95 499,080
1,000,000 General Electric Capital Corp.................... 5.48 1/24/95 996,007
300,000 Goldman Sachs Group L.P.......................... 5.15 3/01/95 296,848
300,000 Goldman Sachs Group L.P.......................... 5.25 3/13/95 296,228
218,000 Hanson Finance (UK) PLC.......................... 5.40 1/17/95 217,379
1,000,000 MCA Funding Corp................................. 5.50 1/25/95 995,847
1,400,000 Norfolk Southern Corporation..................... 5.75 2/07/95 1,391,021
1,000,000 Ontario Hydro.................................... 5.44 1/06/95 998,931
1,000,000 Panasonic Finance, Inc........................... 5.50 1/26/95 995,688
1,320,000 Preferred Receivables Funding Corp............... 5.90 2/02/95 1,312,645
609,000 Transamerica Finance Corp........................ 5.32 1/03/95 608,628
1,000,000 Transamerica Finance Corp........................ 5.40 1/18/95 996,992
500,000 WCP Funding Inc.................................. 6.17 3/03/95 494,575
- ------------------------------------------------------------------------------------------------------------------------
TOTAL COMMERCIAL PAPER (COST--$18,558,638) 18,550,809
- ------------------------------------------------------------------------------------------------------------------------
CORPORATE NOTES+--3.1% 1,000,000 Goldman Sachs Group L.P.......................... 6.07 5/26/95 1,000,000
- ------------------------------------------------------------------------------------------------------------------------
TOTAL CORPORATE NOTES--(COST--$1,000,000) 1,000,000
- ------------------------------------------------------------------------------------------------------------------------
US GOVERNMENT,
AGENCY & INSTRUMENTALITY 320,000 Federal National Mortgage Association............ 5.04 2/22/95 317,144
OBLIGATIONS-- 1,000,000 US Treasury Bills................................ 4.905 3/16/95 988,537
DISCOUNT--5.9% 600,000 US Treasury Bills................................ 6.335 7/06/95 580,738
- ------------------------------------------------------------------------------------------------------------------------
TOTAL US GOVERNMENT & AGENCY OBLIGATIONS--
DISCOUNT (COST--$1,888,010) 1,886,419
- ------------------------------------------------------------------------------------------------------------------------
US GOVERNMENT,
AGENCY & INSTRUMENTALITY 500,000 Federal Farm Credit Bank......................... 5.19 3/01/95 499,063
OBLIGATIONS-- 1,000,000 Federal Home Loan Bank........................... 5.79 4/28/95 997,500
NON-DISCOUNT--31.8% 500,000 Federal Home Loan Bank+.......................... 5.93 12/28/95 500,000
1,000,000 Federal National Mortgage Association+........... 5.83 5/13/96 1,000,000
1,000,000 Federal National Mortgage Association+........... 6.0925 10/11/96 1,000,000
1,000,000 Federal National Mortgage Association+........... 5.95 5/19/97 1,000,000
1,000,000 Federal National Mortgage Association+........... 6.00 5/14/98 1,000,000
500,000 Student Loan Marketing Association+.............. 6.32 3/01/95 500,412
1,000,000 Student Loan Marketing Association+.............. 6.32 3/20/95 1,001,148
1,000,000 Student Loan Marketing Association+.............. 6.32 3/23/95 1,000,539
450,000 Student Loan Marketing Association+.............. 6.07 3/20/96 450,000
100,000 Student Loan Marketing Association+.............. 5.94 4/16/96 100,084
300,000 US Treasury Notes................................ 3.875 3/31/95 298,875
250,000 US Treasury Notes................................ 3.875 4/30/95 248,164
250,000 US Treasury Notes................................ 4.125 6/30/95 247,109
400,000 US Treasury Notes................................ 3.875 8/31/95 392,125
- ------------------------------------------------------------------------------------------------------------------------
TOTAL US GOVERNMENT & AGENCY
OBLIGATIONS--NON-DISCOUNT (COST--$10,252,029) 10,235,019
- ------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS (COST--$32,698,577)--101.5%.......................... 32,670,653
LIABILITIES IN EXCESS OF OTHER ASSETS--(1.5%).......................... (474,622)
NET ASSETS--100.0%..................................................... $32,196,031
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
* Commercial Paper and certain US Government, Agency & Instrumentality Obligations are traded on a discount basis; the
interest rates shown are the discount rates paid at the time of purchase by the Fund. Other securities bear interest
rate at the rates shown, payable at fixed dates or upon maturity. The interest rates on variable rate securities are
adjusted periodically based upon appropriate indexes. The interest rates shown are the rates in effect at December 31,
1994.
+ Variable Rate Note.
</TABLE>
See Notes to Financial Statements.
82
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH VARIABLE SERIES FUNDS, INC.--WORLD INCOME FOCUS FUND
SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 1994 (IN US DOLLARS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE PERCENT OF
AFRICA INDUSTRY FACE AMOUNT FIXED-INCOME INVESTMENTS COST (NOTE 1A) NET ASSETS
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
SOUTH AFRICA FOREIGN GOVERNMENT US $ 1,000,000 Republic of South Africa,
OBLIGATIONS 9.625% due 12/15/1999... $ 996,850 $ 970,000 1.3%
TOTAL FIXED-INCOME
INVESTMENTS IN AFRICA 996,850 970,000 1.3
- ------------------------------------------------------------------------------------------------------------------------
<CAPTION>
LATIN AMERICA
AND THE CARIBBEAN
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
ARGENTINA TELECOMMUNICATIONS 500,000 Telefonica de Argentina,
S.A., 11.875%
due11/01/2004........... 490,040 450,000 0.6
TOTAL FIXED-INCOME
INVESTMENTS IN
ARGENTINA............... 490,040 450,000 0.6
- ------------------------------------------------------------------------------------------------------------------------
MEXICO ENERGY 500,000 Petroleos Mexicanos, 8.25%
due 2/04/1998 (ADR)
(d)..................... 521,875 447,500 0.6
RETAIL STORES 250,000 Controladora Comercial
Mexicana, S.A. de C.V.,
8.75% due 4/21/1998..... 263,125 210,000 0.3
TOTAL FIXED-INCOME
INVESTMENTS IN MEXICO 785,000 657,500 0.9
- ------------------------------------------------------------------------------------------------------------------------
TRINIDAD & FOREIGN GOVERNMENT 350,000 Republic of Trinidad &
TOBAGO OBLIGATIONS Tobago, 11.50% due
11/20/1997.............. 368,500 350,000 0.5
TOTAL FIXED-INCOME
INVESTMENTS IN TRINIDAD
& TOBAGO 368,500 350,000 0.5
- ------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN LATIN
AMERICAN AND CARIBBEAN
SECURITIES 1,643,540 1,457,500 2.0
- ------------------------------------------------------------------------------------------------------------------------
NORTH AMERICA
- ------------------------------------------------------------------------------------------------------------------------
CANADA FOREIGN GOVERNMENT
OBLIGATIONS C $ 2,005,000 Canadian Government Bond,
7.75% due 9/01/1999..... 1,437,271 1,363,017 1.8
TOTAL FIXED-INCOME
INVESTMENTS IN CANADA 1,437,271 1,363,017 1.8
- ------------------------------------------------------------------------------------------------------------------------
UNITED STATES AIR TRANSPORT US $ 250,000 Delta Air Lines, Inc.,
9.30% due 1/02/2010..... 246,925 233,804 0.3
500,000 USAir Inc., 10.375% due
3/01/2013............... 504,688 407,500 0.5
100,000 United Air Pass-Through,
10.125% due 3/22/2015... 109,036 93,935 0.1
----------- ----------- ----------
860,649 735,239 0.9
BROADCASTING & 250,000 Continental Cablevision
PUBLISHING Inc., 9.50% due
8/01/2013............... 250,000 228,750 0.3
500,000 SCI Television Inc.,
11.00% due 6/30/2005.... 520,625 505,000 0.7
----------- ----------- ----------
770,625 733,750 1.0
BUILDING MATERIALS 250,000 Inter-City Products Corp.,
9.75% due 3/01/2000..... 242,500 233,125 0.3
500,000 Pacific Lumber Co., 10.50%
due 3/01/2003........... 492,000 465,000 0.6
----------- ----------- ----------
734,500 698,125 0.9
BUILDING PRODUCTS 250,000 American Standard Inc.,
9.25% due 12/01/2016...... 251,875 228,750 0.3
CELLULAR TELEPHONES 760,000 Dial Page, Inc., 12.25%
& PAGING due 2/15/2000........... 787,150 760,000 1.0
CHEMICALS 500,000 Agriculture Minerals Co.,
L.P., 10.75% due
9/30/2003............... 501,875 505,000 0.7
500,000 Envirodyne Industries
Inc., 10.25% due
12/01/2001.............. 509,375 350,000 0.5
1,225,000 G-I Holdings, Inc.,
11.38%* due
10/01/1998.............. 792,766 747,250 1.0
500,000 Laroche Industries Inc.,
13.00% due 8/15/2004.... 500,000 460,000 0.6
----------- ----------- ----------
2,304,016 2,062,250 2.8
</TABLE>
83
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH VARIABLE SERIES FUNDS, INC.--WORLD INCOME FOCUS FUND
SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 1994 (CONTINUED) (IN US DOLLARS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NORTH AMERICA VALUE PERCENT OF
(CONTINUED) INDUSTRY FACE AMOUNT FIXED-INCOME INVESTMENTS COST (NOTE 1A) NET ASSETS
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
UNITED STATES COMMUNICATIONS US $ 940,000 + American Telecasting Inc.,
(CONTINUED) 12.50%* due 6/15/1999... $ 525,521 $ 430,050 0.6%
250,000 Panamsat L.P., 9.75% due
8/01/2000............... 233,750 235,625 0.3
----------- ----------- ----------
759,271 665,675 0.9
CONGLOMERATES Coltec Industries Inc.:
150,000 9.75% due 11/01/1999...... 159,000 147,000 0.2
100,000 10.25% due 4/01/2002...... 107,000 98,000 0.1
Foamex L.P.:
191,000 9.50% due 6/01/2000....... 186,464 174,765 0.2
500,000 11.25% due 10/01/2002..... 498,125 475,000 0.6
500,000 JB Poindexter Co., Inc.,
12.50% due 5/15/2004.... 500,000 465,000 0.6
500,000 Jordan Industries, Inc.,
10.375% due 8/01/2003... 495,688 445,000 0.6
500,000 Sequa Corp., 9.375% due
12/15/2003.............. 508,750 440,000 0.6
500,000 Sherritt Gordon, Ltd.,
9.75% due 4/01/2003..... 503,625 480,000 0.6
----------- ----------- ----------
2,958,652 2,724,765 3.5
CONSUMER-- 500,000 Coleman Holdings, Inc.,
PRODUCTS 11.09%* due 5/27/1998... 346,300 336,250 0.4
250,000 + Formica Corp., 14.843% due
9/15/2005 (c)........... 250,000 291,984 0.4
1,000,000 + Polymer Group Inc., 12.25%
due 7/15/2002........... 1,001,250 980,000 1.3
1,000,000 Revlon Consumer Products
Corp., 9.375% due
4/01/2001............... 870,055 895,000 1.2
----------- ----------- ----------
2,467,605 2,503,234 3.3
CONTAINERS 500,000 Anchor Glass Container
Co., 9.875% due
12/15/2008.............. 493,125 430,000 0.6
500,000 Owens-Illinois, Inc.,
11.00% due 12/01/2003... 512,500 518,750 0.7
500,000 Silgan Holdings, Inc.,
13.25%* due 6/15/1996... 428,338 420,000 0.6
250,000 Stone-Consolidated Corp.,
10.25% due 12/15/2000... 251,250 246,250 0.3
----------- ----------- ----------
1,685,213 1,615,000 2.2
ENERGY 100,000 + Clark Oil Co., 10.50% due
12/01/2001.............. 106,375 102,500 0.1
1,000,000 Clark R & M Holdings,
Inc., 11.00%* due
2/15/2000............... 578,372 570,000 0.8
250,000 + Consolidated-Hydro Inc.,
11.80%* due 7/15/2003... 166,660 145,000 0.2
250,000 Noble Drilling Corp.,
9.25% due 10/01/2003.... 250,000 236,250 0.3
500,000 Trans Texas Gas Corp.,
10.50% due 9/01/2000.... 493,750 477,500 0.6
500,000 Triton Energy Corp.,
9.68%* due 11/01/1997... 377,714 367,500 0.5
----------- ----------- ----------
1,972,871 1,898,750 2.5
ENTERTAINMENT 300,000 Marvel Holdings, Inc.,
9.125%* due 2/15/1998... 265,500 261,000 0.3
350,000 Spectravision Inc.,
11.50%* due
10/01/1996.............. 287,709 150,500 0.2
1,000,000 Videotron Holdings PLC,
11.817%* due 7/01/1999.. 582,206 525,000 0.7
----------- ----------- ----------
1,135,415 936,500 1.2
FINANCIAL SERVICES 500,000 Penn Financial Corp.,
9.25% due 12/15/2003.... 498,750 440,000 0.6
500,000 Reliance Group Holdings,
Inc., 9.00% due
11/15/2000.............. 460,000 455,000 0.6
----------- ----------- ----------
958,750 895,000 1.2
</TABLE>
84
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH VARIABLE SERIES FUNDS, INC.--WORLD INCOME FOCUS FUND
SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 1994 (CONTINUED) (IN US DOLLARS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NORTH AMERICA VALUE PERCENT OF
(CONTINUED) INDUSTRY FACE AMOUNT FIXED-INCOME INVESTMENTS COST (NOTE 1A) NET ASSETS
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
UNITED STATES FOOD & BEVERAGE US $ 500,000 Chiquita Brands
(CONTINUED) International Corp.,
9.125% due 3/01/2004.... $ 497,500 $ 435,000 0.6%
250,000 Coca-Cola Bottling Co.,
9.00% due 11/15/2003.... 250,625 219,375 0.3
500,000 Cumberland Farms, 10.50%
due 10/01/2003.......... 489,375 415,000 0.6
750,000 Del Monte Corp., 10.00%
due 5/01/2003........... 740,000 510,000 0.7
1,000,000 Grand Union Co., 12.25%
due 7/15/2002........... 917,438 395,000 0.5
300,000 Penn Traffic Co., 9.625%
due 4/15/2005........... 309,000 261,000 0.3
500,000 Pueblo Xtra International
Inc., 9.50% due
8/01/2003............... 500,938 420,000 0.6
250,000 Specialty Foods Corp.,
10.25% due 8/15/2001.... 250,000 222,500 0.3
----------- ----------- ----------
3,954,876 2,877,875 3.9
HOLDING COMPANY 500,000 Astrum International
Corp., 11.50% due
6/08/2003............... 504,375 505,000 0.7
HOME BUILDING 500,000 Del E. Webb Corp., 9.00%
due 2/15/2006........... 500,000 380,000 0.5
250,000 Ryland Group, Inc., 9.625%
due 6/01/2004........... 250,000 210,000 0.3
----------- ----------- ----------
750,000 590,000 0.8
HOTELS & CASINOS 500,000 Aztar Corp., 11.00% due
10/01/2002.............. 507,813 455,000 0.6
1,000,000 Bally's Park Place
Funding, Inc., 9.25% due
3/15/2004............... 920,000 860,000 1.1
1,100,000 Greater Bay Properties,
Inc., Property Funding
Corp., 10.875% due
1/15/2004............... 990,750 891,000 1.2
423,000 Host Marriott Hospitality
Corp., 10.375% due
6/15/2011............... 431,989 423,000 0.6
1,000,000 JQ Hammons Hotel, 8.875%
due 2/15/2004........... 887,500 865,000 1.2
250,000 Mirage Resorts Inc., 9.25%
due 3/15/2003........... 248,750 240,000 0.3
500,000 Showboat, Inc., 13.00% due
8/01/2009............... 500,000 477,500 0.6
750,000 Trump Plaza Funding, Inc.,
10.875% due 6/15/2001... 741,250 570,000 0.8
101,626 Trump Taj Mahal Funding,
Inc., 11.35% due
11/15/1999 (a) (c)...... 95,717 65,112 0.1
----------- ----------- ----------
5,323,769 4,846,612 6.5
INDUSTRIAL SERVICES 1,050,000 ADT Operations, 9.25% due
8/01/2003............... 1,041,062 971,250 1.3
INDUSTRIALS 500,000 Repap Wisconsin, Inc.,
9.25% due 2/01/2002..... 436,250 450,000 0.6
METALS & MINING 250,000 Maxxam Group, Inc.,
12.25%* due 8/01/2003... 163,152 142,500 0.2
PAPER 500,000 S.D. Warren Co., 12.00%
due 12/15/2004.......... 500,000 508,750 0.7
PAPER & FOREST 500,000 Fort Howard Corp., 9.00%
PRODUCTS due 2/01/2006........... 500,000 430,000 0.6
250,000 Riverwood International
Corp., 11.25% due
6/15/2002............... 274,812 256,875 0.3
100,000 Stone Container Group,
10.75% due 10/01/2002... 99,000 99,500 0.1
----------- ----------- ----------
873,812 786,375 1.0
POLLUTION CONTROL 500,000 Mid-American Waste System,
Inc., 12.25% due
2/15/2003............... 511,250 502,500 0.7
</TABLE>
85
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH VARIABLE SERIES FUNDS, INC.--WORLD INCOME FOCUS FUND
SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 1994 (CONTINUED) (IN US DOLLARS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NORTH AMERICA VALUE PERCENT OF
(CONCLUDED) INDUSTRY FACE AMOUNT FIXED-INCOME INVESTMENTS COST (NOTE 1A) NET ASSETS
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
UNITED STATES RESTAURANTS & FOOD US $ 750,000 Flagstar Corp., 11.375%
(CONCLUDED) SERVICES due 9/15/2003........... $ 762,500 $ 622,500 0.8%
Foodmaker, Inc.:
250,000 9.75% due 6/01/2002....... 251,250 187,500 0.3
250,000 9.75% due 11/01/2003...... 246,562 188,125 0.3
----------- ----------- ----------
1,260,312 998,125 1.4
RETAIL 500,000 Bradlees Inc., 11.00% due
8/01/2002............... 489,375 455,000 0.6
STEEL 500,000 WCI Steel Inc., 10.50% due
3/01/2002............... 500,000 480,000 0.6
TELECOMMUNICATIONS 500,000 USA Mobile Communications
Holdings, Inc., 9.50%
due 2/01/2004........... 454,375 405,000 0.5
TEXTILES 1,500,000 WestPoint Stevens Inc.,
9.375% due 12/15/2005... 1,451,875 1,357,500 1.8
TRANSPORT SERVICES 250,000 Eletson Holdings Inc.,
9.25% due 11/15/2003.... 250,000 225,000 0.3
1,050,000 Transtar Holdings, 11.00%*
due 12/15/1999.......... 636,260 525,000 0.7
250,000 Viking Star Shipping Co.,
9.625% due 7/15/2003.... 250,937 230,000 0.3
----------- ----------- ----------
1,137,197 980,000 1.3
US GOVERNMENT & 1,000,000 Federal National Mortgage
AGENCY OBLIGATIONS Association, 8.55% due
12/10/2004.............. 999,219 990,750 1.3
UTILITIES 494,000 Beaver Valley Funding
Corp., 9.00% due
6/01/2017............... 466,212 350,740 0.5
94,668 + Midland Funding Corp. II,
10.33% due 7/23/2002.... 92,774 89,461 0.1
233,382 + Tucson Electric Power Co.,
10.732% due 1/01/2013... 223,464 213,545 0.3
----------- ----------- ----------
782,450 653,746 0.9
TOTAL FIXED-INCOME
INVESTMENTS IN THE
UNITED STATES 38,779,941 34,958,021 46.5
- ------------------------------------------------------------------------------------------------------------------------
SHARES CONVERTIBLE PREFERRED STOCKS &
HELD WARRANTS
- ------------------------------------------------------------------------------------------------------------------------
UNITED STATES BROADCASTING & 9,000 K-III Communications Corp.
PUBLISHING (Preferred)............. 245,250 229,500 0.3
COMMUNICATIONS 4,700 American Telecasting Inc.
(Warrants) (b).......... 11,222 9,400 0.0
TOTAL CONVERTIBLE
PREFERRED STOCKS &
WARRANTS IN
THE UNITED STATES 256,472 238,900 0.3
- ------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN NORTH
AMERICAN SECURITIES 40,473,684 36,559,938 48.6
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
86
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH VARIABLE SERIES FUNDS, INC.--WORLD INCOME FOCUS FUND
SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 1994 (CONTINUED) (IN US DOLLARS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PACIFIC VALUE PERCENT OF
BASIN INDUSTRY FACE AMOUNT FIXED-INCOME INVESTMENTS COST (NOTE 1A) NET ASSETS
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
AUSTRALIA A $ 2,400,000 Australian Government
Bond,
FOREIGN GOVERNMENT 9.50% due 8/15/2003..... $ 1,765,774 $ 1,802,024 2.4%
OBLIGATIONS--
REGIONAL & AGENCY
2,000,000 Queensland Treasury Corp.,
Global Notes, 8.00% due
7/14/1999............... 1,426,689 1,425,128 1.9
----------- ----------- ----------
3,192,463 3,227,152 4.3
TOTAL FIXED-INCOME
INVESTMENTS IN AUSTRALIA 3,192,463 3,227,152 4.3
- ------------------------------------------------------------------------------------------------------------------------
NEW ZEALAND FOREIGN GOVERNMENT NZ$ 500,000 New Zealand Government
OBLIGATIONS Bond, 10.00% due
3/15/2002............... 315,976 342,936 0.5
TOTAL FIXED-INCOME
INVESTMENTS IN NEW
ZEALAND 315,976 342,936 0.5
- ------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN
PACIFIC BASIN SECURITIES 3,508,439 3,570,088 4.8
- ------------------------------------------------------------------------------------------------------------------------
WESTERN EUROPE
- ------------------------------------------------------------------------------------------------------------------------
DENMARK FOREIGN GOVERNMENT Denmark Government Bonds:
OBLIGATIONS Dkr 9,500,000 9.00% due 11/15/1998.... 1,554,615 1,576,300 2.1
2,000,000 9.00% due 11/15/2000...... 344,014 329,944 0.4
----------- ----------- ----------
1,898,629 1,906,244 2.5
TOTAL FIXED-INCOME
INVESTMENTS IN DENMARK 1,898,629 1,906,244 2.5
- ------------------------------------------------------------------------------------------------------------------------
ITALY FOREIGN GOVERNMENT Buoni Poliennali del
OBLIGATIONS Tesoro (Italian
Government Bonds):
Lit 5,000,000,000 8.50% due 8/01/1997....... 3,003,205 2,861,594 3.8
1,000,000,000 12.00% due 9/18/1998...... 657,255 618,289 0.8
1,600,000,000 9.00% due 10/01/1998...... 968,720 908,923 1.2
2,000,000,000 8.50% due 1/01/1999....... 1,195,380 1,107,229 1.5
----------- ----------- ----------
5,824,560 5,496,035 7.3
TOTAL FIXED-INCOME
INVESTMENTS IN ITALY 5,824,560 5,496,035 7.3
- ------------------------------------------------------------------------------------------------------------------------
SPAIN FOREIGN GOVERNMENT Government of Spain:
OBLIGATIONS Esp 200,000,000 11.00% due 6/15/1997.... 1,556,019 1,510,452 2.0
340,000,000 10.25% due 11/30/1998..... 2,584,845 2,473,949 3.3
----------- ----------- ----------
4,140,864 3,984,401 5.3
TOTAL FIXED-INCOME
INVESTMENTS IN SPAIN 4,140,864 3,984,401 5.3
- ------------------------------------------------------------------------------------------------------------------------
Government of Sweden:
SWEDEN FOREIGN GOVERNMENT SEK 5,000,000 11.00% due 1/21/1999.... 661,734 686,440 0.9
OBLIGATIONS--
REGIONAL & AGENCY
6,000,000 SBAB, 11.00% due
1/21/1999............... 816,978 809,180 1.1
----------- ----------- ----------
1,478,712 1,495,620 2.0
TOTAL FIXED-INCOME
INVESTMENTS IN SWEDEN 1,478,712 1,495,620 2.0
- ------------------------------------------------------------------------------------------------------------------------
UNITED KINGDOM FOREIGN GOVERNMENT United Kingdom Gilt:
OBLIGATIONS Pound 300,000 10.50% due 2/21/1997.... 498,511 489,620 0.7
Sterling
2,200,000 9.00% due 3/03/2000....... 3,494,087 3,489,342 4.6
1,400,000 7.00% due 11/06/2001...... 2,075,730 1,997,139 2.7
----------- ----------- ----------
6,068,328 5,976,101 8.0
TOTAL FIXED-INCOME
INVESTMENTS IN THE
UNITED KINGDOM 6,068,328 5,976,101 8.0
- ------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN
WESTERN EUROPEAN
SECURITIES 19,411,093 18,858,401 25.1
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
87
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH VARIABLE SERIES FUNDS, INC.--WORLD INCOME FOCUS FUND
SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 1994 (CONTINUED) (IN US DOLLARS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE PERCENT OF
FACE AMOUNT SHORT-TERM SECURITIES COST (NOTE 1A) NET ASSETS
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
COMMERCIAL PAPER** $ 3,000,000 CXC Inc., 6.00% due
1/13/1995.............. $ 2,993,500 $ 2,993,500 4.0%
2,661,000 General Electric Capital
Corp., 5.80% due
1/03/1995.............. 2,659,714 2,659,714 3.5
2,000,000 Matterhorn Capital Corp.,
5.95% due 1/20/1995.... 1,993,389 1,993,389 2.7
----------- ----------- ----------
7,646,603 7,646,603 10.2
US GOVERNMENT
& AGENCY 1,000,000 Federal Farm Credit Bank,
OBLIGATIONS** 5.57% due 1/11/1995.... 998,298 998,298 1.3
Federal National Mortgage
Association:
1,000,000 5.78% due 1/03/1995...... 999,518 999,518 1.3
2,500,000 5.45% due 1/11/1995...... 2,495,875 2,495,875 3.3
----------- ----------- ----------
4,493,691 4,493,691 5.9
TOTAL SHORT-TERM
SECURITIES 12,140,294 12,140,294 16.1
- ------------------------------------------------------------------------------------------------------------------------
PREMIUMS
OPTIONS PURCHASED FACE AMOUNT ISSUE PAID
- ------------------------------------------------------------------------------------------------------------------------
CURRENCY PUT Pound 1,000,000 British Pound, expiring
OPTIONS PURCHASED Sterling January 1995 at Pound
Sterling1.545.......... 5,700 5,300 0.0
Esp 3,000,000 Spanish Peseta, expiring
January 1995 at Pta
135.5.................. 14,250 11,400 0.0
- ------------------------------------------------------------------------------------------------------------------------
TOTAL OPTIONS PURCHASED 19,950 16,700 0.0
- ------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS 78,193,850 73,572,921 97.9
- ------------------------------------------------------------------------------------------------------------------------
PREMIUMS
RECEIVED
OPTIONS WRITTEN
- ------------------------------------------------------------------------------------------------------------------------
CURRENCY CALL Pound 1,000,000 British Pound, expiring
OPTIONS WRITTEN Sterling January 1995 at Pound
Sterling1.582.......... (4,100) (4,500) 0.0
Esp 3,000,000 Spanish Peseta, expiring
January 1995 at Pta
129.5.................. (6,000) (7,500) 0.0
- ------------------------------------------------------------------------------------------------------------------------
TOTAL OPTIONS WRITTEN (10,100) (12,000) 0.0
- ------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS, NET OF OPTIONS WRITTEN............................ $78,183,750 73,560,921 97.9
-----------
-----------
UNREALIZED DEPRECIATION ON FORWARD FOREIGN EXCHANGE CONTRACTS***..... (217,104) (0.3)
OTHER ASSETS LESS LIABILITIES........................................ 1,806,099 2.4
----------- ----------
NET ASSETS........................................................... $75,149,916 100.0%
----------- ----------
----------- ----------
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
(a) Each $1,000 face amount contains one non-detachable share of Taj Mahal Holding Corp.'s Class B redeemable Common
Stock.
(b) Warrants entitle the Fund to purchase a predetermined number of shares of common stock. The purchase price and number
of shares are subject to adjustments under certain conditions until the expiration date.
(c) Represents a pay-in-kind security which may pay interest/dividends in additional face/shares.
(d) American Depositary Receipts.
* Represents the yield to maturity.
** Commercial Paper and certain US Government & Agency Obligations are traded on a discount basis; the interest rates
shown are the discount rates paid at the time of purchase by the Fund.
</TABLE>
88
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH VARIABLE SERIES FUNDS, INC.--WORLD INCOME FOCUS FUND
SCHEDULE OF INVESTMENTS AS OF DECEMBER 31, 1994 (CONCLUDED) (IN US DOLLARS)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
*** Forward foreign exchange contracts as of December 31, 1994 were as follows:
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
UNREALIZED APPRECIATION
EXPIRATION (DEPRECIATION)
FOREIGN CURRENCY PURCHASED DATE (NOTE 1B)
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
C$ 1,370,000 ............................................ January 1995 $ (11,589)
DM 763,647 ........................................... February 1995 2,462
Lit 939,020,000 ............................................ January 1995 7,709
- ------------------------------------------------------------------------------------------------------------------------
(TOTAL US$ COMMITMENT--$2,050,834) $ (1,418)
------------
------------
- ------------------------------------------------------------------------------------------------------------------------
<CAPTION>
FOREIGN CURRENCY SOLD
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
DM 16,627,988 ............................................. January 1995 $ (190,946)
Dkr 8,388,437 .............................................. January 1995 (19,633)
Esp 65,070,400 ............................................. February 1995 (2,459)
Lit 2,141,150,970 ............................................... January 1995 16,520
SEK 11,778,323 ............................................. January 1995 (19,168)
- ------------------------------------------------------------------------------------------------------------------------
(TOTAL US$ COMMITMENT--$15,314,835) $ (215,686)
------------
- ------------------------------------------------------------------------------------------------------------------------
TOTAL UNREALIZED DEPRECIATION ON FORWARD FOREIGN EXCHANGE CONTRACTS--NET... $ (217,104)
------------
------------
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
+Restricted securities as to resale. The value of the Fund's investment in
restricted securities was approximately $2,253,000, representing 3.00% of net
assets.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ACQUISITION VALUE
ISSUE DATES COST (NOTE 1A)
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
American Telecasting Inc., 12.50% due 6/15/2004............................... 10/25/1994 $ 525,521 $ 430,050
Clark Oil Co., 10.50% due 12/01/2001.......................................... 10/25/1994 106,375 102,500
Consolidated-Hydro Inc., 11.80%* due 7/15/2003................................ 7/01/1993 166,660 145,000
Formica Corp., 14.843% due 9/15/2005.......................................... 7/08/1993 250,000 291,984
Midland Funding Corp. II, 10.33% due 7/23/2002................................ 9/17/1993- 92,774 89,461
6/17/1994
Polymer Group Inc., 12.25% due 7/15/2002...................................... 7/07/1994 1,001,250 980,000
Tucson Electric Power Co., 10.732% due 1/01/2013.............................. 8/03/1993 223,464 213,545
- ------------------------------------------------------------------------------------------------------------------------
TOTAL......................................................................... $ 2,366,044 $2,252,540
----------- ----------
----------- ----------
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
89
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH VARIABLE SERIES FUNDS, INC.
STATEMENTS OF ASSETS AND LIABILITIES AS OF DECEMBER 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
BASIC DEVELOPING DOMESTIC
AMERICAN VALUE CAPITAL MONEY
BALANCED FOCUS MARKETS MARKET
FUND FUND FOCUS FUND FUND
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
ASSETS:
Investments, at value*
(Note 1a)................................................... $156,864,556 $163,908,366 $ 37,930,023 $ 369,119,126
Options purchased, at value (cost-$0) (Notes 1a & 1b)......... -- -- -- --
Unrealized appreciation on forward foreign exchange contracts
(Note 1b)................................................... -- -- -- --
Cash.......................................................... 24,432 -- 511,162 117,724
Receivable for options written................................ -- -- -- --
Interest receivable........................................... 1,904,617 -- 133,580 1,020,024
Dividends receivable.......................................... 149,262 672,554 60,277 --
Receivable for securities sold................................ -- 622,683 -- --
Receivable for capital shares sold............................ 267,236 1,496,022 756,701 --
Receivable from investment adviser (Note 2)................... -- -- -- --
Receivable for variation margin on stock index futures
contracts
(Note 1b)................................................... -- -- -- --
Receivable for forward foreign exchange contracts (Note 1b)... -- -- -- --
Deferred organization expenses (Note 1f)...................... -- 2,880 3,467 2,680
Prepaid registration fees and other assets (Note 1f).......... 7,938 7,436 6,996 16,604
Foreign cash.................................................. -- -- -- --
------------ ------------ ------------ --------------
Total assets................................................ 159,218,041 166,709,941 39,402,206 370,276,158
------------ ------------ ------------ --------------
- ------------------------------------------------------------------------------------------------------------------------
LIABILITIES:
Options written, at value (premiums received--$0)
(Notes 1a & 1b)............................................. -- -- -- --
Unrealized depreciation on forward foreign exchange contracts
(Note 1b)................................................... -- -- -- --
Payable for capital shares redeemed........................... 152,494 2,044 414 --
Payable for securities purchased.............................. -- 1,615,738 2,667,845 6,775,811
Payable to investment adviser (Note 2)........................ 71,388 78,215 30,271 146,721
Accrued expenses and other liabilities........................ 43,419 707,225 27,924 154,526
------------ ------------ ------------ --------------
Total liabilities........................................... 267,301 2,403,222 2,726,454 7,077,058
------------ ------------ ------------ --------------
- ------------------------------------------------------------------------------------------------------------------------
NET ASSETS.................................................... $158,950,740 $164,306,719 $ 36,675,752 $ 363,199,100
------------ ------------ ------------ --------------
------------ ------------ ------------ --------------
- ------------------------------------------------------------------------------------------------------------------------
NET ASSETS CONSIST OF:
Common Stock, $0.10 par value+................................ $ 1,215,117 $ 1,480,240 $ 385,591 $ 36,339,542
Paid-in capital in excess of par.............................. 161,253,879 159,005,944 38,977,033 327,055,873
Undistributed investment income--net.......................... 3,297,750 1,591,385 330,561 --
Undistributed (accumulated) realized capital gains (losses) on
investments and foreign currency transactions--net (Note
5).......................................................... (251,964) 6,953,099 (672,256) --
Accumulated distributions in excess of capital gains--net..... (382,403) -- -- --
Unrealized appreciation (depreciation) on investments and
foreign
currency transactions--net.................................. (6,181,639) (4,723,949) (2,345,177) (196,315)
------------ ------------ ------------ --------------
NET ASSETS.................................................... $158,950,740 $164,306,719 $ 36,675,752 $ 363,199,100
------------ ------------ ------------ --------------
------------ ------------ ------------ --------------
- ------------------------------------------------------------------------------------------------------------------------
CAPITAL SHARES OUTSTANDING.................................... 12,151,167 14,802,400 3,855,911 363,395,415
------------ ------------ ------------ --------------
------------ ------------ ------------ --------------
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE...... $ 13.08 $ 11.10 $ 9.51 $ 1.00
------------ ------------ ------------ --------------
------------ ------------ ------------ --------------
- ------------------------------------------------------------------------------------------------------------------------
* Identified cost............................................. $163,046,195 $168,632,315 $ 40,275,572 $ 369,315,441
------------ ------------ ------------ --------------
------------ ------------ ------------ --------------
+ Authorized shares........................................... 100,000,000 100,000,000 100,000,000 1,300,000,000
------------ ------------ ------------ --------------
------------ ------------ ------------ --------------
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
90
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH VARIABLE SERIES FUNDS, INC.
STATEMENTS OF ASSETS AND LIABILITIES AS OF DECEMBER 31, 1994 (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GLOBAL GLOBAL
FLEXIBLE STRATEGY UTILITY
EQUITY STRATEGY FOCUS FOCUS
GROWTH FUND FUND FUND FUND
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
ASSETS:
Investments, at value* (Note 1a).............................. $169,929,115 $273,718,417 $512,141,013 $ 126,191,523
Options purchased, at value (cost-$0) (Notes 1a & 1b)......... -- -- -- --
Unrealized appreciation on forward foreign exchange contracts
(Note 1b)................................................... -- -- 559,659 --
Cash.......................................................... 20,700 9,065 -- 46,470
Receivable for options written................................ -- 7,257 -- --
Interest receivable........................................... -- 1,408,479 3,905,068 33,000
Dividends receivable.......................................... 141,668 251,197 832,441 516,217
Receivable for securities sold................................ 748,125 4,559,730 -- --
Receivable for capital shares sold............................ 1,145,985 612,064 1,024,634 141,262
Receivable from investment adviser (Note 2)................... -- -- -- --
Receivable for variation margin on stock index futures
contracts
(Note 1b)................................................... -- -- -- --
Receivable for forward foreign exchange contracts (Note 1b)... -- -- -- --
Deferred organization expenses (Note 1f)...................... -- -- 2,680 4,139
Prepaid registration fees and other assets (Note 1f).......... 7,983 10,015 9,009 7,649
Foreign cash.................................................. -- -- 135,671 31,393
------------ ------------ ------------ --------------
Total assets................................................ 171,993,576 280,576,224 518,610,175 126,971,653
------------ ------------ ------------ --------------
- ------------------------------------------------------------------------------------------------------------------------
LIABILITIES:
Options written, at value (premiums received--$20,528)
(Notes 1a & 1b)............................................. -- 18,000 -- --
Unrealized depreciation on forward foreign exchange contracts
(Note 1b)................................................... -- -- -- --
Payable for capital shares redeemed........................... 15,774 68,041 124,363 33,855
Payable for securities purchased.............................. 1,430,646 5,768,001 1,306,886 562,632
Payable to investment adviser (Note 2)........................ 99,663 144,884 276,128 62,764
Accrued expenses and other liabilities........................ 403,870 79,032 1,495,482 69,595
------------ ------------ ------------ --------------
Total liabilities........................................... 1,949,953 6,077,958 3,202,859 728,846
------------ ------------ ------------ --------------
- ------------------------------------------------------------------------------------------------------------------------
NET ASSETS.................................................... $170,043,623 $274,498,266 $515,407,316 $ 126,242,807
------------ ------------ ------------ --------------
------------ ------------ ------------ --------------
- ------------------------------------------------------------------------------------------------------------------------
NET ASSETS CONSIST OF:
Common Stock, $0.10 par value+................................ $ 883,084 $ 1,867,412 $ 4,395,430 $ 1,335,955
Paid-in capital in excess of par.............................. 168,115,089 263,415,116 515,603,136 136,710,139
Undistributed investment income--net.......................... 383,328 3,474,388 7,256,695 1,361,234
Undistributed (accumulated) realized capital gains (losses) on
investments and foreign currency transactions--net (Note
5).......................................................... (1,982,006) 4,982,943 -- (1,447,878)
Accumulated distributions in excess of capital gains--net..... -- -- (169,671) (33,521)
Unrealized appreciation (depreciation) on investments and
foreign
currency transactions--net.................................. 2,644,128 758,407 (11,678,274) (11,683,122)
------------ ------------ ------------ --------------
NET ASSETS.................................................... $170,043,623 $274,498,266 $515,407,316 $ 126,242,807
------------ ------------ ------------ --------------
------------ ------------ ------------ --------------
- ------------------------------------------------------------------------------------------------------------------------
CAPITAL SHARES OUTSTANDING.................................... 8,830,838 18,674,116 43,954,297 13,359,556
------------ ------------ ------------ --------------
------------ ------------ ------------ --------------
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE...... $ 19.26 $ 14.70 $ 11.73 $ 9.45
------------ ------------ ------------ --------------
------------ ------------ ------------ --------------
- ------------------------------------------------------------------------------------------------------------------------
* Identified cost............................................. $167,284,987 $272,969,088 $524,369,249 $ 137,874,783
------------ ------------ ------------ --------------
------------ ------------ ------------ --------------
+ Authorized shares........................................... 100,000,000 100,000,000 100,000,000 100,000,000
------------ ------------ ------------ --------------
------------ ------------ ------------ --------------
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
91
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH VARIABLE SERIES FUNDS, INC.
STATEMENTS OF ASSETS AND LIABILITIES AS OF DECEMBER 31, 1994 (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
HIGH INTERMEDIATE
CURRENT GOVERNMENT INTERNATIONAL INTERNATIONAL
INCOME BOND BOND EQUITY FOCUS
FUND FUND FUND FUND
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
ASSETS:
Investments, at value* (Note 1a).............................. $248,917,211 $ 17,575,242 $ 10,617,103 $ 243,715,823
Options purchased, at value (cost--$963,762) (Notes 1a &
1b)......................................................... -- -- -- 468,559
Unrealized appreciation on forward foreign exchange contracts
(Note 1b)................................................... -- -- -- 300,276
Cash.......................................................... 22,860 288 4,544 221,657
Receivable for options written................................ -- -- -- --
Interest receivable........................................... 6,181,269 54,647 206,379 241,288
Dividends receivable.......................................... -- -- -- 219,430
Receivable for securities sold................................ -- -- 378,451 1,973,053
Receivable for capital shares sold............................ 767,743 221,435 85,602 1,596,976
Receivable from investment adviser (Note 2)................... -- 19,250 24,543 --
Receivable for forward foreign exchange contracts (Note 1b)... -- -- 8,673 98,212
Deferred organization expenses (Note 1f)...................... -- -- 3,467 4,856
Prepaid registration fees and other assets (Note 1f).......... 58,109 9,365 7,318 18,749
Foreign cash.................................................. -- -- -- 2,155,248
------------ ------------ ------------ --------------
Total assets.................................................. 255,947,192 17,880,227 11,336,080 251,014,127
------------ ------------ ------------ --------------
- ------------------------------------------------------------------------------------------------------------------------
LIABILITIES:
Options written, at value (premiums received--$572,922)
(Notes 1a & 1b)............................................. -- -- -- 276,821
Unrealized depreciation on forward foreign exchange contracts
(Note 1b)................................................... -- -- 66,829 --
Payable for variation margin on stock index futures contracts
(Note 1b)................................................... -- -- -- 99,903
Payable for forward foreign exchange contracts (Note 1b)...... -- -- 3,738 210,076
Payable for capital shares redeemed........................... 48,459 60,201 41,556 34,739
Payable for securities purchased.............................. -- -- 1,278,189 2,203,033
Payable to investment adviser (Note 2)........................ 101,917 -- -- 149,750
Accrued expenses and other liabilities........................ 78,076 9,375 12,474 156,030
------------ ------------ ------------ --------------
Total liabilities........................................... 228,452 69,576 1,402,786 3,130,352
------------ ------------ ------------ --------------
- ------------------------------------------------------------------------------------------------------------------------
NET ASSETS.................................................... $255,718,740 $ 17,810,651 $ 9,933,294 $ 247,883,775
------------ ------------ ------------ --------------
------------ ------------ ------------ --------------
- ------------------------------------------------------------------------------------------------------------------------
NET ASSETS CONSIST OF:
Common Stock, $0.10 par value+................................ $ 2,409,799 $ 178,632 $ 102,432 $ 2,274,065
Paid-in capital in excess of par.............................. 277,181,703 17,674,702 10,038,837 247,618,706
Undistributed investment income--net.......................... 2,509,688 73,375 54,400 382,131
Undistributed (accumulated) realized capital gains (losses) on
investments and foreign currency transactions--net (Note
5).......................................................... (2,036,293) (55,316) (98,691) 3,904,078
Accumulated distributions in excess of capital gains--net..... -- -- -- --
Unrealized appreciation (depreciation) on investments and
foreign
currency transactions--net.................................. (24,346,157) (60,742) (163,684) (6,295,205)
------------ ------------ ------------ --------------
NET ASSETS.................................................... $255,718,740 $ 17,810,651 $ 9,933,294 $ 247,883,775
------------ ------------ ------------ --------------
------------ ------------ ------------ --------------
- ------------------------------------------------------------------------------------------------------------------------
CAPITAL SHARES OUTSTANDING.................................... 24,097,990 1,786,321 1,024,322 22,740,650
------------ ------------ ------------ --------------
------------ ------------ ------------ --------------
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE...... $ 10.61 $ 9.97 $ 9.70 $ 10.90
------------ ------------ ------------ --------------
------------ ------------ ------------ --------------
- ------------------------------------------------------------------------------------------------------------------------
* Identified cost............................................. $273,263,368 $ 17,635,984 $ 10,713,571 $ 250,851,453
------------ ------------ ------------ --------------
------------ ------------ ------------ --------------
+ Authorized shares........................................... 100,000,000 100,000,000 100,000,000 100,000,000
------------ ------------ ------------ --------------
------------ ------------ ------------ --------------
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
92
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH VARIABLE SERIES FUNDS, INC.
STATEMENTS OF ASSETS AND LIABILITIES AS OF DECEMBER 31, 1994 (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NATURAL
RESOURCES PRIME QUALITY
FOCUS BOND EQUITY
FUND FUND FUND
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
ASSETS:
Investments, at value* (Note 1a).............................................. $ 39,455,573 $384,799,680 $464,815,703
Options purchased, at value (cost-$0) (Notes 1a & 1b)......................... -- -- --
Unrealized appreciation on forward foreign exchange contracts (Note 1b)....... -- -- --
Cash.......................................................................... 134,274 1,093 167
Receivable for options written................................................ -- -- 35,168
Interest receivable........................................................... -- 6,368,933 --
Dividends receivable.......................................................... 32,417 -- 559,641
Receivable for securities sold................................................ -- -- --
Receivable for capital shares sold............................................ 353,492 581,420 1,941,009
Receivable from investment adviser (Note 2)................................... -- -- --
Receivable for forward foreign exchange contracts (Note 1b)................... -- -- --
Deferred organization expenses (Note 1f)...................................... -- -- --
Prepaid registration fees and other assets (Note 1f).......................... 7,181 31,058 10,676
Foreign cash.................................................................. -- -- --
------------ ------------ ------------
Total assets................................................................ 39,982,937 391,782,184 467,362,364
------------ ------------ ------------
- ------------------------------------------------------------------------------------------------------------------------
LIABILITIES:
Options written, at value (premiums received--$35,167) (Notes 1a & 1b)........ -- -- 32,288
Unrealized depreciation on forward foreign exchange contracts (Note 1b)....... -- -- --
Payable for capital shares redeemed........................................... 2,115 308,607 127,639
Payable for securities purchased.............................................. 221,257 -- 2,644,351
Payable to investment adviser (Note 2)........................................ 20,728 146,922 77,519
Accrued expenses and other liabilities........................................ 23,976 92,480 120,685
------------ ------------ ------------
Total liabilities........................................................... 268,076 548,009 3,002,482
------------ ------------ ------------
- ------------------------------------------------------------------------------------------------------------------------
NET ASSETS.................................................................... $ 39,714,861 $391,234,175 $464,359,882
------------ ------------ ------------
------------ ------------ ------------
- ------------------------------------------------------------------------------------------------------------------------
NET ASSETS CONSIST OF:
Common Stock, $0.10 par value+................................................ $ 367,092 $ 3,517,366 $ 1,674,095
Paid-in capital in excess of par.............................................. 39,880,039 426,013,937 436,450,499
Undistributed investment income--net.......................................... 289,267 2,399,783 3,329,753
Undistributed (accumulated) realized capital gains (losses) on investments and
foreign currency transactions--net (Note 5)................................. 52,494 (14,592,431) 9,696,061
Accumulated distributions in excess of capital gains--net..................... -- (4,204,953) --
Unrealized appreciation (depreciation) on investments and foreign currency
transactions--net........................................................... (874,031) (21,899,527) 13,209,474
------------ ------------ ------------
NET ASSETS.................................................................... $ 39,714,861 $391,234,175 $464,359,882
------------ ------------ ------------
------------ ------------ ------------
- ------------------------------------------------------------------------------------------------------------------------
CAPITAL SHARES OUTSTANDING.................................................... 3,670,928 35,173,662 16,740,944
------------ ------------ ------------
------------ ------------ ------------
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE...................... $ 10.82 $ 11.12 $ 27.74
------------ ------------ ------------
------------ ------------ ------------
- ------------------------------------------------------------------------------------------------------------------------
* Identified cost............................................................. $ 40,329,553 $406,699,207 $451,609,108
------------ ------------ ------------
------------ ------------ ------------
+ Authorized shares........................................................... 100,000,000 100,000,000 100,000,000
------------ ------------ ------------
------------ ------------ ------------
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
93
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH VARIABLE SERIES FUNDS, INC.
STATEMENTS OF ASSETS AND LIABILITIES AS OF DECEMBER 31, 1994 (CONCLUDED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
RESERVE WORLD INCOME
ASSETS FOCUS
FUND FUND
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
ASSETS:
Investments, at value* (Note 1a)............................................................ $ 32,670,653 $ 73,556,221
Options purchased, at value (cost-$19,950) (Notes 1a & 1b).................................. -- 16,700
Unrealized appreciation on forward foreign exchange contracts
(Note 1b)................................................................................. -- --
Cash........................................................................................ 45,109 281
Receivable for options written.............................................................. -- --
Interest receivable......................................................................... 89,637 1,753,034
Dividends receivable........................................................................ -- --
Receivable for securities sold.............................................................. -- 1,483,407
Receivable for capital shares sold.......................................................... -- 96,076
Receivable from investment adviser (Note 2)................................................. -- --
Receivable for forward foreign exchange contracts (Note 1b)................................. -- 18,870
Receivable for foreign exchange contracts (Note 1c)......................................... -- 8,963
Deferred organization expenses (Note 1f).................................................... -- 5,522
Prepaid registration fees and other assets (Note 1f)........................................ 8,452 7,325
Foreign cash................................................................................ -- --
------------ ------------
Total assets.............................................................................. 32,813,851 76,946,399
------------ ------------
- ------------------------------------------------------------------------------------------------------------------------
LIABILITIES:
Options written, at value (premium received--$10,100) (Notes 1a & 1b)....................... -- 12,000
Unrealized depreciation on forward foreign exchange contracts (Note 1b)..................... -- 217,104
Payable for capital shares redeemed......................................................... -- 50,604
Payable for securities purchased............................................................ 580,784 1,423,345
Payable to investment adviser (Note 2)...................................................... 13,480 36,922
Payable for forward foreign exchange contacts (Note 1b)..................................... -- 15,313
Accrued expenses and other liabilities...................................................... 23,556 41,195
------------ ------------
Total liabilities......................................................................... 617,820 1,796,483
------------ ------------
- ------------------------------------------------------------------------------------------------------------------------
NET ASSETS.................................................................................. $ 32,196,031 $ 75,149,916
------------ ------------
------------ ------------
- ------------------------------------------------------------------------------------------------------------------------
NET ASSETS CONSIST OF:
Common Stock, $0.10 par value+.............................................................. $ 3,222,396 $ 819,675
Paid-in capital in excess of par............................................................ 29,001,559 81,931,992
Undistributed investment income--net........................................................ -- 409,286
Undistributed (accumulated) realized capital gains (losses) on investments and foreign
currency transactions--net (Note 5)....................................................... -- (3,076,667)
Accumulated distributions in excess of capital gains--net................................... -- (101,589)
Unrealized appreciation (depreciation) on investments and foreign currency
transactions--net......................................................................... (27,924) (4,832,781)
------------ ------------
NET ASSETS.................................................................................. $ 32,196,031 $ 75,149,916
------------ ------------
------------ ------------
- ------------------------------------------------------------------------------------------------------------------------
CAPITAL SHARES OUTSTANDING.................................................................. 32,223,956 8,196,750
------------ ------------
------------ ------------
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE.................................... $ 1.00 $ 9.17
------------ ------------
------------ ------------
- ------------------------------------------------------------------------------------------------------------------------
* Identified cost........................................................................... $ 32,698,577 $ 78,173,900
------------ ------------
------------ ------------
+ Authorized shares......................................................................... 500,000,000 100,000,000
------------ ------------
------------ ------------
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
94
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH VARIABLE SERIES FUNDS, INC.
STATEMENTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DEVELOPING
BASIC CAPITAL
AMERICAN VALUE MARKETS DOMESTIC
BALANCED FOCUS FOCUS MONEY MARKET
FUND FUND FUND+ FUND
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME (NOTES 1D & 1E):
Interest and discount earned*................................. $ 4,958,617 $ 414,252 $ 401,983 $ 12,848,322
Dividends**................................................... 1,706,808 2,765,969 123,937 --
Other income.................................................. -- -- -- --
------------ ------------ --------------- ------------
Total income.................................................. 6,665,425 3,180,221 525,920 12,848,322
------------ ------------ --------------- ------------
- ------------------------------------------------------------------------------------------------------------------------
EXPENSES:
Investment advisory fees (Note 2)............................. 803,973 683,107 151,621 1,418,479
Transfer agent fees (Note 2).................................. 4,610 4,979 3,335 4,963
Custodian fees................................................ 20,073 21,954 19,805 21,488
Professional fees............................................. 11,626 9,878 197 19,750
Registration fees (Note 1f)................................... 21,826 46,761 10,932 61,060
Directors' fees and expenses.................................. 3,460 1,906 1,273 5,255
Accounting services (Note 2).................................. 47,773 36,941 3,357 88,336
Pricing services.............................................. 879 148 705 --
Amortization of organization expenses (Note 1f)............... -- 720 533 1,340
Other......................................................... 7,713 7,774 12,516 9,011
------------ ------------ --------------- ------------
Total expenses before reimbursement........................... 921,933 814,168 204,274 1,629,682
Reimbursement of expenses (Note 2)............................ -- -- (8,915) (201,286)
------------ ------------ --------------- ------------
Expenses after reimbursement.................................. 921,933 814,168 195,359 1,428,396
------------ ------------ --------------- ------------
Investment income--net........................................ 5,743,492 2,366,053 330,561 11,419,926
------------ ------------ --------------- ------------
- ------------------------------------------------------------------------------------------------------------------------
REALIZED & UNREALIZED GAIN (LOSS) ON INVESTMENTS & FOREIGN
CURRENCY TRANSACTIONS--NET (NOTES 1B, 1C, 1E & 3):
Realized gain (loss) on investments--net...................... (634,222) 7,037,711 (673,696) 5,347
Realized gain (loss) on foreign currency transactions--net.... -- -- 1,440 --
Change in unrealized appreciation/depreciation on
investments--net............................................ (11,011,500) (6,328,115) (2,345,549) (199,049)
Change in unrealized appreciation/depreciation on foreign
currency transactions....................................... -- -- 372 --
------------ ------------ --------------- ------------
Total realized and unrealized gain (loss) on investments and
foreign currency transactions--net.......................... (11,645,722) 709,596 (3,017,433) (193,702)
------------ ------------ --------------- ------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS.................................................. $ (5,902,230) $ 3,075,649 $ (2,686,872) $ 11,226,224
------------ ------------ --------------- ------------
------------ ------------ --------------- ------------
- ------------------------------------------------------------------------------------------------------------------------
* Net of withholding tax on interest......................... $ -- $ -- $ -- $ --
------------ ------------ --------------- ------------
------------ ------------ --------------- ------------
** Net of withholding tax on dividends........................ $ -- $ 8,543 $ 6,598 $ --
------------ ------------ --------------- ------------
------------ ------------ --------------- ------------
- ------------------------------------------------------------------------------------------------------------------------
+ The Fund commenced operations on May 2, 1994.
</TABLE>
See Notes to Financial Statements.
95
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH VARIABLE SERIES FUNDS, INC.
STATEMENTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1994 (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GLOBAL
FLEXIBLE GLOBAL STRATEGY UTILITY
EQUITY STRATEGY FOCUS FOCUS
GROWTH FUND FUND FUND FUND
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME (NOTES 1D & 1E):
Interest and discount earned*................................. $ 895,389 $ 5,787,799 $ 10,067,955 $ 1,231,526
Dividends**................................................... 669,729 2,196,302 5,567,639 4,474,341
Other income.................................................. -- -- -- --
------------ ------------ --------------- ------------
Total income.................................................. 1,565,118 7,984,101 15,635,594 5,705,867
------------ ------------ --------------- ------------
- ------------------------------------------------------------------------------------------------------------------------
EXPENSES:
Investment advisory fees (Note 2)............................. 1,062,086 1,598,769 2,818,040 777,517
Transfer agent fees (Note 2).................................. 4,834 4,590 5,036 5,151
Custodian fees................................................ 26,377 52,658 197,855 46,034
Professional fees............................................. 12,853 20,917 25,776 14,198
Registration fees (Note 1f)................................... 31,434 35,224 119,809 27,605
Directors' fees and expenses.................................. 3,186 5,455 7,619 3,081
Accounting services (Note 2).................................. 33,230 68,115 145,219 50,614
Pricing services.............................................. -- 1,755 4,692 7,173
Amortization of organization expenses (Note 1f)............... -- -- 1,340 863
Other......................................................... 7,790 10,653 10,788 10,997
------------ ------------ --------------- ------------
Total expenses before reimbursement........................... 1,181,790 1,798,136 3,336,174 943,233
Reimbursement of expenses (Note 2)............................ -- -- -- --
------------ ------------ --------------- ------------
Expenses after reimbursement.................................. 1,181,790 1,798,136 3,336,174 943,233
------------ ------------ --------------- ------------
Investment income--net........................................ 383,328 6,185,965 12,299,420 4,762,634
------------ ------------ --------------- ------------
- ------------------------------------------------------------------------------------------------------------------------
REALIZED & UNREALIZED GAIN (LOSS) ON INVESTMENTS & FOREIGN
CURRENCY TRANSACTIONS--NET (NOTES 1B, 1C, 1E & 3):
Realized gain (loss) on investments--net...................... (1,981,763) 5,023,562 144,657 (1,490,181)
Realized gain (loss) on foreign currency transactions--net.... -- (278,822) (347,617) 8,194
Change in unrealized appreciation/depreciation on
investments--net............................................ (8,755,921) (21,116,778) (23,945,864) (14,248,450)
Change in unrealized appreciation/depreciation on foreign
currency transactions....................................... -- 12,489 562,516 (7,346)
------------ ------------ --------------- ------------
Total realized and unrealized gain (loss) on investments and
foreign currency transactions--net.......................... (10,737,684) (16,359,549) (23,586,308) (15,737,783)
------------ ------------ --------------- ------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS.................................................. $(10,354,356) $(10,173,584) $ (11,286,888) $(10,975,149)
------------ ------------ --------------- ------------
------------ ------------ --------------- ------------
- ------------------------------------------------------------------------------------------------------------------------
* Net of withholding tax on interest......................... $ -- $ 4,718 $ 85,307 $ --
------------ ------------ --------------- ------------
------------ ------------ --------------- ------------
** Net of withholding tax on dividends........................ $ 5,943 $ 42,946 $ 488,165 $ 154,407
------------ ------------ --------------- ------------
------------ ------------ --------------- ------------
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
96
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH VARIABLE SERIES FUNDS, INC.
STATEMENTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1994 (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
HIGH INTERMEDIATE
CURRENT GOVERNMENT INTERNATIONAL INTERNATIONAL
INCOME BOND BOND EQUITY FOCUS
FUND FUND+ FUND+ FUND
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME (NOTES 1D & 1E):
Interest and discount earned*................................. $ 22,778,469 $ 295,427 $ 325,753 $ 1,496,583
Dividends**................................................... 334,916 -- -- 2,235,384
Other income.................................................. 235,375 -- -- --
------------ ------------ --------------- ------------
Total income.................................................. 23,348,760 295,427 325,753 3,731,967
------------ ------------ --------------- ------------
- ------------------------------------------------------------------------------------------------------------------------
EXPENSES:
Investment advisory fees (Note 2)............................. 1,176,777 31,692 30,838 1,355,159
Transfer agent fees (Note 2).................................. 5,379 3,336 3,334 4,958
Custodian fees................................................ 30,104 3,082 8,867 229,925
Professional fees............................................. 21,025 140 105 13,648
Registration fees (Note 1f)................................... 48,801 2,855 3,273 70,488
Directors' fees and expenses.................................. 4,813 1,040 548 2,559
Accounting services (Note 2).................................. 61,084 2,152 2,401 58,093
Pricing services.............................................. 16,562 200 10 7,688
Amortization of organization expenses (Note 1f)............... -- -- 533 1,389
Other......................................................... 7,037 6,445 5,566 14,660
------------ ------------ --------------- ------------
Total expenses before reimbursement........................... 1,371,582 50,942 55,475 1,758,567
Reimbursement of expenses (Note 2)............................ -- (50,942) (55,475) --
------------ ------------ --------------- ------------
Expenses after reimbursement.................................. 1,371,582 0 0 1,758,567
------------ ------------ --------------- ------------
Investment income--net........................................ 21,977,178 295,427 325,753 1,973,400
------------ ------------ --------------- ------------
- ------------------------------------------------------------------------------------------------------------------------
REALIZED & UNREALIZED GAIN (LOSS) ON INVESTMENTS & FOREIGN
CURRENCY TRANSACTIONS--NET (NOTES 1B, 1C, 1E & 3):
Realized gain (loss) on investments--net...................... (1,918,504) (55,316) (41,625) 8,428,685
Realized gain (loss) on foreign currency transactions--net.... -- -- (57,066) (4,578,468)
Change in unrealized appreciation/depreciation on
investments--net............................................ (28,517,478) (60,742) (96,468) (10,859,913)
Change in unrealized appreciation/depreciation on foreign
currency transactions....................................... -- -- (67,216) 179,572
------------ ------------ --------------- ------------
Total realized and unrealized gain (loss) on investments and
foreign currency transactions--net.......................... (30,435,982) (116,058) (262,375) (6,830,124)
------------ ------------ --------------- ------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS.................................................. $ (8,458,804) $ 179,369 $ 63,378 $ (4,856,724)
------------ ------------ --------------- ------------
------------ ------------ --------------- ------------
- ------------------------------------------------------------------------------------------------------------------------
* Net of withholding tax on interest......................... $ -- $ -- $ 2,261 $ --
------------ ------------ --------------- ------------
------------ ------------ --------------- ------------
** Net of withholding tax on dividends........................ $ -- $ -- $ -- $ 289,260
------------ ------------ --------------- ------------
------------ ------------ --------------- ------------
- ------------------------------------------------------------------------------------------------------------------------
+ The Fund commenced operations on May 2, 1994.
</TABLE>
See Notes to Financial Statements.
97
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH VARIABLE SERIES FUNDS, INC.
STATEMENTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1994 (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NATURAL
RESOURCES PRIME QUALITY
FOCUS BOND EQUITY
FUND FUND FUND
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME (NOTES 1D & 1E):
Interest and discount earned*................................................. $ 214,093 $ 26,769,262 $ 2,816,268
Dividends**................................................................... 553,399 -- 4,900,901
Other income.................................................................. -- 72,032 18,659
------------ ------------ ------------
Total income.................................................................. 767,492 26,841,294 7,735,828
------------ ------------ ------------
- ------------------------------------------------------------------------------------------------------------------------
EXPENSES:
Investment advisory fees (Note 2)............................................. 179,492 1,740,429 1,889,188
Transfer agent fees (Note 2).................................................. 4,937 2,518 4,612
Custodian fees................................................................ 25,200 41,220 43,242
Professional fees............................................................. 4,920 21,696 27,111
Registration fees (Note 1f)................................................... 9,221 38,164 65,571
Directors' fees and expenses.................................................. 977 8,524 8,360
Accounting services (Note 2).................................................. 10,096 125,342 122,099
Pricing services.............................................................. 1,620 1,472 345
Amortization of organization expenses (Note 1f)............................... -- -- --
Other......................................................................... 4,900 10,091 11,242
------------ ------------ ------------
Total expenses before reimbursement........................................... 241,363 1,989,456 2,171,770
Reimbursement of expenses (Note 2)............................................ -- -- --
------------ ------------ ------------
Expenses after reimbursement.................................................. 241,363 1,989,456 2,171,770
------------ ------------ ------------
Investment income--net........................................................ 526,129 24,851,838 5,564,058
------------ ------------ ------------
- ------------------------------------------------------------------------------------------------------------------------
REALIZED & UNREALIZED GAIN (LOSS) ON INVESTMENTS & FOREIGN CURRENCY
TRANSACTIONS--NET (NOTES 1B, 1C, 1E & 3):
Realized gain (loss) on investments--net...................................... 108,631 (18,783,776) 10,329,151
Realized gain (loss) on foreign currency transactions--net.................... (6,578) -- 36
Change in unrealized appreciation/depreciation on investments--net............ (810,334) (23,383,983) (20,646,284)
Change in unrealized appreciation/depreciation on foreign currency
transactions................................................................ (31) -- --
------------ ------------ ------------
Total realized and unrealized gain (loss) on investments and foreign currency
transactions--net........................................................... (708,312) (42,167,759) (10,317,097)
------------ ------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS............... $ (182,183) $(17,315,921) $ (4,753,039)
------------ ------------ ------------
------------ ------------ ------------
- ------------------------------------------------------------------------------------------------------------------------
* Net of withholding tax on interest......................................... $ -- $ -- $ --
------------ ------------ ------------
------------ ------------ ------------
** Net of withholding tax on dividends........................................ $ 29,892 $ -- $ 66,254
------------ ------------ ------------
------------ ------------ ------------
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
98
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH VARIABLE SERIES FUNDS, INC.
STATEMENTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1994 (CONCLUDED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
WORLD
RESERVE INCOME
ASSETS FOCUS
FUND FUND
<S> <C> <C>
- ---------------------------------------------------------------------------------
INVESTMENT INCOME (NOTES 1D & 1E):
Interest and discount earned*....................... $ 1,465,320 $ 6,249,764
Dividends**......................................... -- 19,406
Other income........................................ -- --
------------ ------------
Total income........................................ 1,465,320 6,269,170
------------ ------------
- ---------------------------------------------------------------------------------
EXPENSES:
Investment advisory fees (Note 2)................... 166,992 429,608
Transfer agent fees (Note 2)........................ 4,335 5,033
Custodian fees...................................... 16,221 29,585
Professional fees................................... 7,017 12,113
Registration fees (Note 1f)......................... 3,028 12,157
Directors' fees and expenses........................ 1,316 1,820
Accounting services (Note 2)........................ 9,822 28,623
Pricing services.................................... -- 5,070
Amortization of organization expenses (Note 1f)..... -- 1,578
Other............................................... 7,711 9,911
------------ ------------
Total expenses before reimbursement................. 216,442 535,498
Reimbursement of expenses (Note 2).................. -- --
------------ ------------
Expenses after reimbursement........................ 216,442 535,498
------------ ------------
Investment income--net.............................. 1,248,878 5,733,672
------------ ------------
- ---------------------------------------------------------------------------------
REALIZED & UNREALIZED GAIN (LOSS) ON INVESTMENTS &
FOREIGN CURRENCY TRANSACTIONS--NET (NOTES 1B, 1C,
1E & 3):
Realized gain (loss) on investments--net............ 1,901 (2,736,044)
Realized gain (loss) on foreign currency
transactions--net................................ -- (500,659)
Change in unrealized appreciation/depreciation on
investments--net................................. (35,001) (5,331,495)
Change in unrealized appreciation/depreciation on
foreign currency transactions.................... -- (221,597)
------------ ------------
Total realized and unrealized gain (loss) on
investments and foreign currency
transactions--net................................ (33,100) (8,789,795)
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS....................................... $ 1,215,778 $ (3,056,123)
------------ ------------
------------ ------------
- ---------------------------------------------------------------------------------
* Net of withholding tax interest.................. $ -- $ 34,112
------------ ------------
------------ ------------
** Net of withholding tax on dividends.............. $ -- $ --
------------ ------------
------------ ------------
- ---------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
99
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH VARIABLE SERIES FUNDS, INC.
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
AMERICAN BALANCED FUND
FOR THE YEAR ENDED
DECEMBER 31,
INCREASE (DECREASE) IN NET ASSETS: 1994 1993
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
OPERATIONS:
Investment Income--net.......................................................... $ 5,743,492 $ 1,898,709
Realized gain (loss) on investments and foreign currency transactions--net...... (634,222 ) 381,401
Change in unrealized appreciation/depreciation on investments and foreign
currency transactions--net...................................................... (11,011,500 ) 3,571,478
------------ -------------
Net increase (decrease) in net assets resulting from operations................. (5,902,230 ) 5,851,588
------------ -------------
- ------------------------------------------------------------------------------------------------------------------------
DIVIDENDS & DISTRIBUTIONS TO SHAREHOLDERS (NOTE 1G):
Investment income--net.......................................................... (3,724,806 ) (975,251 )
Realized gain on investments--net............................................... -- (227,751 )
In excess of realized gain on investments--net.................................. (382,403) --
------------ -------------
Net decrease in net assets resulting from dividends and distributions to
shareholders.................................................................... (4,107,209 ) (1,203,002 )
------------ -------------
- ------------------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS (NOTE 4):
Net increase in net assets derived from capital share transactions.............. 53,540,259 85,853,104
------------ -------------
- ------------------------------------------------------------------------------------------------------------------------
NET ASSETS:
Total increase (decrease) in net assets......................................... 43,530,820 90,501,690
Beginning of period............................................................. 115,419,920 24,918,230
------------ -------------
End of period*.................................................................. $158,950,740 $115,419,920
------------ -------------
------------ -------------
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
*Undistributed investment income--net........................................... $ 3,297,750 $ 1,279,064
------------ -------------
------------ -------------
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
+ Commencement of Operations.
</TABLE>
See Notes to Financial Statements.
100
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH VARIABLE SERIES FUNDS, INC.
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
BASIC VALUE FOCUS FUND
FOR THE YEAR
ENDED FOR THE PERIOD
DEC. 31, JULY 1, 1993+
1994 TO DEC. 31, 1993
- ---------------------------------------
<C> <C> <C> <S>
$ 2,366,053 $ 153,585
7,037,711 (84,612)
(6,328,115 ) 1,604,166
- ------------ ----------------
3,075,649 1,673,139
- ------------ ----------------
</TABLE>
- ---------------------------------------
<TABLE>
<C> <C> <C> <S>
(928,253 ) --
-- --
-- --
- ------------ ----------------
(928,253 ) --
- ------------ ----------------
</TABLE>
- ---------------------------------------
<TABLE>
<C> <C> <C> <S>
114,952,060 43,534,024
- ------------ ----------------
</TABLE>
- ---------------------------------------
<TABLE>
<C> <C> <C> <S>
117,099,456 45,207,163
47,207,263 2,000,100
- ------------ ----------------
$164,306,719 $ 47,207,263
- ------------ ----------------
- ------------ ----------------
</TABLE>
- ---------------------------------------
<TABLE>
<C> <C> <C> <S>
$ 1,591,385 $ 153,585
- ------------ ----------------
- ------------ ----------------
</TABLE>
- ---------------------------------------
101
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH VARIABLE SERIES FUNDS, INC.
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DEVELOPING CAPITAL DOMESTIC MONEY
MARKETS FOCUS FUND MARKET FUND
FOR THE PERIOD FOR THE YEAR ENDED
MAY 2, 1994+ DECEMBER 31,
INCREASE (DECREASE) IN NET ASSETS: TO DEC. 31, 1994 1994 1993
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
OPERATIONS:
Investment Income (loss)--net.................................... $ 330,561 $11,419,926 $ 2,754,970
Realized gain (loss) on investments and foreign currency
transactions--net................................................ (672,256) 5,347 41,187
Change in unrealized appreciation/depreciation on investments and
foreign currency transactions--net............................... (2,345,177) (199,049 ) (1,652)
------------------- ------------ ----------------
Net increase (decrease) in net assets resulting from
operations....................................................... (2,686,872) 11,226,224 2,794,505
------------------- ------------ ----------------
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C> <C>
DIVIDENDS & DISTRIBUTIONS TO SHAREHOLDERS (NOTE 1G):
Investment income--net........................................... -- (11,419,926 ) (2,754,970)
Realized gain on investments--net................................ -- (5,347 ) (41,187)
In excess of realized gain on investments--net................... -- -- --
------------------- ------------ ----------------
Net decrease in net assets resulting from dividends and
distributions to shareholders.................................... -- (11,425,273 ) (2,796,157)
------------------- ------------ ----------------
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C> <C>
CAPITAL SHARE TRANSACTIONS (NOTE 4):
Net increase in net assets derived from capital share
transactions..................................................... 31,362,624 192,866,796 129,405,088
------------------- ------------ ----------------
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C> <C>
NET ASSETS:
Total increase (decrease) in net assets.......................... 28,675,752 192,667,747 129,403,436
Beginning of period.............................................. 8,000,000 170,531,353 41,127,917
------------------- ------------ ----------------
End of period*................................................... $36,675,752 $363,199,100 $170,531,353
------------------- ------------ ----------------
------------------- ------------ ----------------
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C> <C>
*Undistributed investment income--net............................ $ 330,561 $ -- $ --
------------------- ------------ ----------------
------------------- ------------ ----------------
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
+ Commencement of Operations.
</TABLE>
See Notes to Financial Statements.
102
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
EQUITY GROWTH FUND
<S> <C> <C>
FOR THE YEAR ENDED DECEMBER 31,
1994 1993
- --------------------------------------
<S> <C> <C>
$ 383,328 $ (24,896)
(1,981,763 ) 3,639,264
(8,755,921 ) 7,724,322
- ------------ ----------------
(10,354,356 ) 11,338,690
- ------------ ----------------
</TABLE>
- --------------------------------------
<TABLE>
<S> <C> <C>
-- (5,834)
(895,916 ) --
-- --
- ------------ ----------------
(895,916 ) (5,834)
- ------------ ----------------
</TABLE>
- --------------------------------------
<TABLE>
<S> <C> <C>
82,317,471 64,476,433
- ------------ ----------------
</TABLE>
- --------------------------------------
<TABLE>
<S> <C> <C>
71,067,199 75,809,289
98,976,424 23,167,135
- ------------ ----------------
$170,043,623 $ 98,976,424
- ------------ ----------------
- ------------ ----------------
</TABLE>
- --------------------------------------
<TABLE>
<S> <C> <C>
$ 383,328 $ --
- ------------ ----------------
- ------------ ----------------
</TABLE>
- --------------------------------------
103
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH VARIABLE SERIES FUNDS, INC.
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FLEXIBLE STRATEGY FUND
--------------------------------------
<S> <C> <C> <C>
FOR THE YEAR ENDED
DECEMBER 31,
--------------------------------------
INCREASE (DECREASE) IN NET ASSETS: 1994 1993
- ------------------------------------------------------------------------------------------------------------------------
OPERATIONS:
Investment income--net........................................................ $ 6,185,965 $ 2,797,378
Realized gain (loss) on investments and foreign currency transactions--net.... 4,744,740 6,698,385
Change in unrealized appreciation/depreciation on investments and foreign
currency transactions--net.................................................... (21,104,289 ) 11,282,893
------------ ----------------
Net increase (decrease) in net assets resulting from operations............... (10,173,584 ) 20,778,656
------------ ----------------
- ------------------------------------------------------------------------------------------------------------------------
DIVIDENDS & DISTRIBUTIONS TO SHAREHOLDERS (NOTE 1G):
Investment income--net........................................................ (4,296,790 ) (1,224,834)
Realized gain on investments--net............................................. (6,450,353 ) (235,661)
In excess of realized gain on investments--net................................ -- --
------------ ----------------
Net decrease in net assets resulting from dividends and distributions to
shareholders.................................................................. (10,747,143 ) (1,460,495)
------------ ----------------
- ------------------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS (NOTE 4)
Net increase in net assets derived from capital share transactions............ 100,642,477 92,909,143
------------ ----------------
- ------------------------------------------------------------------------------------------------------------------------
NET ASSETS:
Total increase (decrease) in net assets....................................... 79,721,750 112,227,304
Beginning of year............................................................. 194,776,516 82,549,212
------------ ----------------
End of year*.................................................................. $274,498,266 $194,776,516
------------ ----------------
------------ ----------------
- ------------------------------------------------------------------------------------------------------------------------
*Undistributed investment income--net......................................... $ 3,474,388 $ 1,585,213
------------ ----------------
------------ ----------------
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
104
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GLOBAL STRATEGY FOCUS FUND GLOBAL UTILITY FOCUS FUND
- -------------------------------------- --------------------------------------
<S> <C> <C> <C> <C>
FOR THE YEAR ENDED FOR THE YEAR ENDED
DECEMBER 31, DECEMBER 31,
- -------------------------------------- --------------------------------------
1994 1993 1994 1993
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C> <C>
$ 12,299,420 $ 2,159,624 $ 4,762,634 $ 677,491
(202,960) 1,265,216 (1,481,987 ) 34,110
(23,383,348) 11,694,466 (14,255,796 ) 2,572,674
- ------------ ------------- ------------ -------------
(11,286,888) 15,119,306 (10,975,149 ) 3,284,275
- ------------ ------------- ------------ -------------
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C> <C>
(6,805,684) (531,339 ) (3,959,983 ) (118,908 )
(1,046,779) -- -- --
(169,671) -- (33,522) --
- ------------ ------------- ------------ -------------
(8,022,134) (531,339 ) (3,993,505 ) (118,908 )
- ------------ ------------- ------------ -------------
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C> <C>
265,089,157 239,511,867 36,694,148 99,351,846
- ------------ ------------- ------------ -------------
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C> <C>
245,780,135 254,099,834 21,725,494 102,517,213
269,627,181 15,527,347 104,517,313 2,000,100
- ------------ ------------- ------------ -------------
$515,407,316 $269,627,181 $126,242,807 $104,517,313
- ------------ ------------- ------------ -------------
- ------------ ------------- ------------ -------------
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C> <C>
$ 7,256,695 $ 1,762,959 $ 1,361,234 $ 558,583
- ------------ ------------- ------------ -------------
- ------------ ------------- ------------ -------------
</TABLE>
- --------------------------------------------------------------------------------
105
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH VARIABLE SERIES FUNDS, INC.
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
HIGH CURRENT INCOME FUND
<S> <C> <C> <C>
FOR THE YEAR ENDED DECEMBER 31,
INCREASE (DECREASE) IN NET ASSETS: 1994 1993
- ------------------------------------------------------------------------------------------------------------------------
OPERATIONS:
Investment income--net......................................................... $21,977,178 $ 6,889,208
Realized gain (loss) on investments and foreign currency transactions--net..... (1,918,504 ) 615,071
Change in unrealized appreciation/depreciation on investments and foreign
currency transactions--net..................................................... (28,517,478 ) 4,541,949
------------ ------------
Net increase (decrease) in net assets resulting from operations................ (8,458,804 ) 12,046,228
------------ ------------
- ------------------------------------------------------------------------------------------------------------------------
DIVIDENDS & DISTRIBUTIONS TO SHAREHOLDERS (NOTE 1G):
Investment income--net......................................................... (20,563,966 ) (6,035,740 )
Realized gain on investments--net.............................................. -- --
In excess of realized gain on investments--net................................. -- --
------------ ------------
Net decrease in net assets resulting from dividends and distributions to
shareholders................................................................... (20,563,966 ) (6,035,740 )
------------ ------------
- ------------------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS (NOTE 4):
Net increase in net assets derived from capital share transactions............. 121,313,338 131,074,555
------------ ------------
- ------------------------------------------------------------------------------------------------------------------------
NET ASSETS:
Total increase (decrease) in net assets........................................ 92,290,568 137,085,043
Beginning of period............................................................ 163,428,172 26,343,129
------------ ------------
End of period*................................................................. $255,718,740 $163,428,172
------------ ------------
------------ ------------
- ------------------------------------------------------------------------------------------------------------------------
*Undistributed investment income--net.......................................... $ 2,509,684 $ 1,096,472
------------ ------------
------------ ------------
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
+ Commencement of Operations.
</TABLE>
See Notes to Financial Statements.
106
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INTERMEDIATE GOVERNMENT
BOND FUND INTERNATIONAL BOND FUND
FOR THE PERIOD FOR THE PERIOD
MAY 2, 1994+ TO MAY 2, 1994+ TO
DECEMBER 31, 1994 DECEMBER 31, 1994
- ------------------------------------------------------
<S> <C> <C>
$ 295,427 $ 325,753
(55,316) (98,691)
(60,742) (163,684)
- ------------------------ ------------
179,369 63,378
- ------------------------ ------------
</TABLE>
- ------------------------------------------------------
<TABLE>
<S> <C> <C>
(222,052) (271,353)
-- --
-- --
- ------------------------ ------------
(222,052) (271,353)
- ------------------------ ------------
</TABLE>
- ------------------------------------------------------
<TABLE>
<S> <C> <C>
15,853,334 5,141,269
- ------------------------ ------------
</TABLE>
- ------------------------------------------------------
<TABLE>
<S> <C> <C>
15,810,651 4,933,294
2,000,000 5,000,000
- ------------------------ ------------
$ 17,810,651 $9,933,294
- ------------------------ ------------
- ------------------------ ------------
</TABLE>
- ------------------------------------------------------
<TABLE>
<S> <C> <C>
$ 73,375 $ 54,400
- ------------------------ ------------
- ------------------------ ------------
</TABLE>
- ------------------------------------------------------
107
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH VARIABLE SERIES FUNDS, INC.
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INTERNATIONAL EQUITY
FOCUS FUND
<S> <C> <C> <C>
FOR THE YEAR FOR THE PERIOD
ENDED JULY 1, 1993+ TO
DECEMBER 31, DECEMBER 31,
INCREASE (DECREASE) IN NET ASSETS: 1994 1993
- ------------------------------------------------------------------------------------------------------------------------
OPERATIONS:
Investment income--net..................................................... $ 1,973,400 $ 53,487
Realized gain (loss) on investments and foreign currency
transactions--net.......................................................... 3,850,217 115,051
Change in unrealized appreciation/depreciation on investments and foreign
currency transactions--net................................................. (10,680,341 ) 4,385,136
------------ ----------------
Net increase (decrease) in net assets resulting from operations............ (4,856,724 ) 4,553,674
------------ ----------------
- ------------------------------------------------------------------------------------------------------------------------
DIVIDENDS & DISTRIBUTIONS TO SHAREHOLDERS (NOTE 1G):
Investment income--net..................................................... (1,644,756 ) --
Realized gain on investments--net.......................................... (61,190 ) --
In excess of realized gain on investments--net............................. -- --
------------ ----------------
Net decrease in net assets resulting from dividends and distributions to
shareholders............................................................... (1,705,946 ) --
------------ ----------------
- ------------------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS (NOTES 4):
Net increase in net assets derived from capital share transactions......... 177,540,023 64,352,648
------------ ----------------
- ------------------------------------------------------------------------------------------------------------------------
NET ASSETS:
Total increase (decrease) in net assets.................................... 170,977,353 68,906,322
Beginning of period........................................................ 76,906,422 8,000,100
------------ ----------------
End of period*............................................................. $247,883,775 $ 76,906,422
-
-
------------ ----------------
------------ ----------------
- ------------------------------------------------------------------------------------------------------------------------
*Undistributed investment income--net...................................... $ 382,131 $ 53,487
------------ ----------------
------------ ----------------
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
+ Commencement of Operations.
</TABLE>
See Notes to Financial Statements.
108
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NATURAL RESOURCES
FOCUS FUND PRIME BOND FUND
<S> <C> <C> <C> <C>
FOR THE YEAR ENDED DECEMBER 31, FOR THE YEAR ENDED DECEMBER 31,
1994 1993 1994 1993
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C> <C>
$ 526,129 $ 122,897 $24,851,838 $ 10,814,492
102,053 64,691 (18,783,776 ) 4,199,723
(810,365 ) (85,134) (23,383,983 ) 200,559
- ------------ ------------- ------------ -------------
(182,183 ) 102,454 (17,315,921 ) 15,214,774
- ------------ ------------- ------------ -------------
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C> <C>
(319,496 ) (40,449) (23,986,615 ) (9,710,533 )
-- -- -- (752,637 )
-- -- (4,204,953 ) --
- ------------ ------------- ------------ -------------
(319,496 ) (40,449) (28,191,568 ) (10,463,170 )
- ------------ ------------- ------------ -------------
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C> <C>
25,438,978 10,571,877 122,650,200 224,530,037
- ------------ ------------- ------------ -------------
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C> <C>
24,937,299 10,633,882 77,142,711 229,281,641
14,777,562 4,143,680 314,091,464 84,809,823
- ------------ ------------- ------------ -------------
$39,714,861 $14,777,562 $391,234,175 $314,091,464
- ------------ ------------- ------------ -------------
- ------------ ------------- ------------ -------------
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C> <C>
$ 289,267 $ 82,634 $ 2,399,783 $ 1,534,560
- ------------ ------------- ------------ -------------
- ------------ ------------- ------------ -------------
</TABLE>
- --------------------------------------------------------------------------------
109
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH VARIABLE SERIES FUNDS, INC.
STATEMENTS OF CHANGES IN NET ASSETS (CONCLUDED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
QUALITY EQUITY FUND
<S> <C> <C> <C>
FOR THE YEAR ENDED DECEMBER 31,
INCREASE (DECREASE) IN NET ASSETS: 1994 1993
- ------------------------------------------------------------------------------------------------------------------------
OPERATIONS:
Investment income--net..................................................... $ 5,564,058 $ 1,870,132
Realized gain (loss) on investments and foreign currency
transactions--net.......................................................... 10,329,187 6,568,044
Change in unrealized appreciation/depreciation on investments and foreign
currency transactions--net................................................. (20,646,284 ) 20,450,896
------------ ----------------
Net increase (decrease) in net assets resulting from operations............ (4,753,039 ) 28,889,072
------------ ----------------
- ------------------------------------------------------------------------------------------------------------------------
DIVIDENDS & DISTRIBUTIONS TO SHAREHOLDERS (NOTE 1G):
Investment income--net..................................................... (3,345,688 ) (758,750)
Realized gain on investments--net.......................................... (7,187,525 ) (236,123)
In excess of realized gain on investments--net............................. -- --
------------ ----------------
Net decrease in net assets resulting from dividends and distributions to
shareholders............................................................... (10,533,213 ) (994,873)
------------ ----------------
- ------------------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS (NOTES 4):
Net increase in net assets derived from capital share transactions......... 170,226,497 193,548,727
------------ ----------------
- ------------------------------------------------------------------------------------------------------------------------
NET ASSETS:
Total increase (decrease) in net assets.................................... 154,940,245 221,442,926
Beginning of period........................................................ 309,419,637 87,976,711
------------ ----------------
End of period*............................................................. $464,359,882 $309,419,637
------------ ----------------
------------ ----------------
- ------------------------------------------------------------------------------------------------------------------------
*Undistributed investment income--net...................................... $ 3,329,753 $ 1,111,383
------------ ----------------
------------ ----------------
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
+ Commencement of Operations.
</TABLE>
See Notes to Financial Statements.
110
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
WORLD INCOME FOCUS FUND
FOR THE YEAR
RESERVE ASSETS FUND ENDED FOR THE PERIOD
FOR THE YEAR ENDED DECEMBER 31, DEC. 31, JULY 1, 1993+ TO
1994 1993 1994 DEC. 31, 1993
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 1,248,878 $ 757,449 $ 5,733,672 $ 904,488
1,901 15,302 (3,236,703 ) 176,780
(35,001 ) (173 ) (5,553,092 ) 720,311
- ------------ ------------- ------------ ----------------
1,215,778 772,578 (3,056,123 ) 1,801,579
- ------------ ------------- ------------ ----------------
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C> <C>
(1,248,878 ) (757,449 ) (5,598,199 ) (647,419)
(1,901 ) (15,302 ) -- --
-- -- (101,589 ) --
- ------------ ------------- ------------ ----------------
(1,250,779 ) (772,751 ) (5,699,788 ) (647,419)
- ------------ ------------- ------------ ----------------
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C> <C>
2,063,127 3,400,720 33,168,379 41,583,188
- ------------ ------------- ------------ ----------------
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C> <C>
2,028,126 3,400,547 24,412,468 42,737,348
30,167,905 26,767,358 50,737,448 8,000,100
- ------------ ------------- ------------ ----------------
$32,196,031 $ 30,167,905 $75,149,916 $ 50,737,448
- ------------ ------------- ------------ ----------------
- ------------ ------------- ------------ ----------------
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C> <C>
$ -- $ -- $ 409,286 $ 257,069
- ------------ ------------- ------------ ----------------
- ------------ ------------- ------------ ----------------
</TABLE>
- --------------------------------------------------------------------------------
111
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH VARIABLE SERIES FUNDS, INC.
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
AMERICAN BALANCED FUND
THE FOLLOWING PER SHARE DATA AND RATIOS HAVE BEEN DERIVED -------------------------------------------------------------------
FROM INFORMATION PROVIDED IN THE FINANCIAL STATEMENTS. FOR THE YEAR ENDED DECEMBER 31,
-------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSET VALUE: 1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of year......................... $ 14.08 $ 12.85 $ 12.82 $ 11.26 $ 11.74
------------ -------- -------- ------- -------
Investment income (loss)--net.............................. .48 .32 .31 .47 .47
Realized and unrealized gain (loss) on investments and
foreign currency transactions--net....................... (1.06) 1.37 .37 1.76 (.35)
------------ -------- -------- ------- -------
Total from investment operations........................... (.58) 1.69 .68 2.23 .12
------------ -------- -------- ------- -------
Less dividends and distributions:
Investment income--net................................... (.37) (.34) (.37) (.49) (.46)
Realized gain on investments--net........................ -- (.12) (.28) (.18) (.14)
In excess of realized gain on investments--net (.05) -- -- -- --
------------ -------- -------- ------- -------
Total dividends and distributions.......................... (.42) (.46) (.65) (.67) (.60)
------------ -------- -------- ------- -------
Net asset value, end of year............................... $ 13.08 $ 14.08 $ 12.85 $ 12.82 $ 11.26
------------ -------- -------- ------- -------
------------ -------- -------- ------- -------
- ------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT RETURN*:
Based on net asset value per share......................... (4.19%) 13.49% 5.72% 20.65% 1.22%
------------ -------- -------- ------- -------
------------ -------- -------- ------- -------
- ------------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
Expenses, net of reimbursement............................. .63% .70% .97% 1.20% 1.25%
------------ -------- -------- ------- -------
------------ -------- -------- ------- -------
Expenses................................................... .63% .70% .97% 1.20% 1.50%
------------ -------- -------- ------- -------
------------ -------- -------- ------- -------
Investment income--net..................................... 3.95% 3.20% 3.71% 4.16% 4.71%
------------ -------- -------- ------- -------
------------ -------- -------- ------- -------
- ------------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA:
Net assets, end of year (in thousands)..................... $158,951 $115,420 $ 24,918 $ 7,937 $ 5,675
------------ -------- -------- ------- -------
------------ -------- -------- ------- -------
Portfolio turnover......................................... 35.36% 12.55% 36.34% 50.82% 23.52%
------------ -------- -------- ------- -------
------------ -------- -------- ------- -------
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
* Total investment returns exclude insurance-related fees and expenses.
</TABLE>
See Notes to Financial Statements.
112
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH VARIABLE SERIES FUNDS, INC.
FINANCIAL HIGHLIGHTS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
BASIC VALUE FOCUS FUND
THE FOLLOWING PER SHARE DATA AND RATIOS HAVE BEEN DERIVED -----------------------------------------
FROM INFORMATION PROVIDED IN THE FINANCIAL STATEMENTS. FOR THE FOR THE PERIOD
YEAR ENDED JULY 1, 1993+ TO
INCREASE (DECREASE) IN NET ASSET VALUE: DECEMBER 31, 1994 DECEMBER 31, 1993
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period.................................... $ 10.95 $ 10.00
----------------- --------
Investment income (loss)--net........................................... .17 .04
Realized and unrealized gain (loss) on investments and foreign currency
transactions--net..................................................... .08 .91
----------------- --------
Total from investment operations........................................ .25 .95
----------------- --------
Less dividends and distributions:
Investment income--net................................................ (.10) --
Realized gain on investments--net..................................... -- --
----------------- --------
Total dividends and distributions....................................... (.10) --
----------------- --------
Net asset value, end of period.......................................... $ 11.10 $ 10.95
----------------- --------
----------------- --------
- -----------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT RETURN**:
Based on net asset value per share...................................... 2.36% 9.50%++
----------------- --------
----------------- --------
- -----------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
Expenses, net of reimbursement.......................................... .72% .86%*
----------------- --------
----------------- --------
Expenses................................................................ .72% .86%*
----------------- --------
----------------- --------
Investment income--net.................................................. 2.08% 1.69%*
----------------- --------
----------------- --------
- -----------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA:
Net assets, end of period (in thousands)................................ $ 164,307 $47,207
----------------- --------
----------------- --------
Portfolio turnover...................................................... 60.55% 30.86%
----------------- --------
----------------- --------
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
* Annualized.
** Total investment returns exclude insurance-related fees and expenses.
+ Commencement of Operations.
++ Aggregate total investment return.
</TABLE>
See Notes to Financial Statements.
113
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH VARIABLE SERIES FUNDS, INC.
FINANCIAL HIGHLIGHTS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DEVELOPING CAPITAL
MARKETS FOCUS FUND
THE FOLLOWING PER SHARE DATA AND RATIOS HAVE BEEN DERIVED --------------------------
FROM INFORMATION PROVIDED IN THE FINANCIAL STATEMENTS. FOR THE PERIOD MAY 2,
1994+
INCREASE (DECREASE) IN NET ASSET VALUE: TO DECEMBER 31,1994
<S> <C>
- ------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period.................................................... $ 10.00
--------
Investment income (loss)--net........................................................... .09
Realized and unrealized gain (loss) on investments and foreign currency
transactions--net..................................................................... (.58)
--------
Total from investment operations........................................................ (.49)
--------
Less dividends and distributions:
Investment income--net................................................................ --
Realized gain on investments--net..................................................... --
--------
Total dividends and distributions....................................................... --
--------
Net asset value, end of period.......................................................... $ 9.51
--------
--------
- ------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT RETURN**:
Based on net asset value per share...................................................... (4.90%)++
--------
--------
- ------------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
Expenses, net of reimbursement.......................................................... 1.29%*
--------
--------
Expenses................................................................................ 1.35%*
--------
--------
Investment income--net.................................................................. 2.18%*
--------
--------
- ------------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA:
Net assets, end of period (in thousands)................................................ $ 36,676
--------
--------
Portfolio turnover...................................................................... 29.79%
--------
--------
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
* Annualized.
** Total investment returns exclude insurance-related fees and expenses.
+ Commencement of Operations.
++ Aggregate total investment return.
</TABLE>
See Notes to Financial Statements.
114
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH VARIABLE SERIES FUNDS, INC.
FINANCIAL HIGHLIGHTS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DOMESTIC MONEY MARKET FUND
---------------------------------------------------------------
THE FOLLOWING PER SHARE DATA AND RATIOS HAVE BEEN DERIVED FOR THE YEAR ENDED
FROM INFORMATION PROVIDED IN THE FINANCIAL STATEMENTS. DECEMBER 31, FOR THE PERIOD
--------------------------------------- FEBRUARY 20, 1992+
INCREASE (DECREASE) IN NET ASSET VALUE: 1994 1993 TO DECEMBER 31, 1992
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period..................... $ 1.00 $ 1.00 $ 1.00
---------- ----------------- ----------
Investment income (loss)--net............................ .0386 .0302 .0302
Realized and unrealized gain (loss) on investments and
foreign currency transactions--net..................... (.0007) .0005 .0013
---------- ----------------- ----------
Total from investment operations......................... .0379 .0307 .0315
---------- ----------------- ----------
Less dividends and distributions:
Investment income--net................................. (.0386) (.0302) (.0302)
Realized gain on investments--net...................... -- (.0005) (.0010)
---------- ----------------- ----------
Total dividends and distributions........................ (.0386) (.0307) (.0312)
---------- ----------------- ----------
Net asset value, end of period........................... $ 1.00 $ 1.00 $ 1.00
---------- ----------------- ----------
---------- ----------------- ----------
- ------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT RETURN**:
Based on net asset value per share....................... 3.94% 3.10% 3.16%++
---------- ----------------- ----------
---------- ----------------- ----------
- ------------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
Expenses, net of reimbursement........................... .50% .36% .32%*
---------- ----------------- ----------
---------- ----------------- ----------
Expenses................................................. .57% .63% .88%*
---------- ----------------- ----------
---------- ----------------- ----------
Investment income--net, and realized gain (loss) on
investments--net....................................... 4.02% 3.03% 3.48%*
---------- ----------------- ----------
---------- ----------------- ----------
- ------------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA:
Net assets, end of period (in thousands)................. $363,199 $ 170,531 $ 41,128
---------- ----------------- ----------
---------- ----------------- ----------
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
* Annualized.
** Total investment returns exclude insurance-related fees and expenses.
+ Commencement of Operations.
++ Aggregate total investment return.
</TABLE>
See Notes to Financial Statements.
115
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH VARIABLE SERIES FUNDS, INC.
FINANCIAL HIGHLIGHTS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
EQUITY GROWTH FUND
--------------------------------------------------------------------
THE FOLLOWING PER SHARE DATA AND RATIOS HAVE BEEN DERIVED FOR THE YEAR ENDED DECEMBER 31,
FROM INFORMATION PROVIDED IN THE FINANCIAL STATEMENTS. --------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSET VALUE: 1994* 1993* 1992* 1991 1990
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of year....................... $ 20.96 $ 17.80 $ 17.96 $ 11.98 $ 13.70
------------ -------- -------- ------- --------
Investment income (loss)--net............................ .05 (.01) .01 .09 .05
Realized and unrealized gain (loss) on investments and
foreign currency transactions--net..................... (1.56) 3.17 (.10) 5.91 (1.77)
------------ -------- -------- ------- --------
Total from investment operations......................... (1.51) 3.16 (.09) 6.00 (1.72)
------------ -------- -------- ------- --------
Less dividends and distributions:
Investment income--net................................. -- --+ (.07) (.02) --
Realized gain on investments--net...................... (.19) -- -- -- --
------------ -------- -------- ------- --------
Total dividends and distributions........................ (.19) -- (.07) (.02) --
------------ -------- -------- ------- --------
Net asset value, end of year............................. $ 19.26 $ 20.96 $ 17.80 $ 17.96 $ 11.98
------------ -------- -------- ------- --------
------------ -------- -------- ------- --------
- ------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT RETURN**:
Based on net asset value per share....................... (7.27%) 17.78% (0.53%) 50.10% (12.55%)
------------ -------- -------- ------- --------
------------ -------- -------- ------- --------
- ------------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
Expenses, net of reimbursement........................... .83% .96% 1.18% 1.25% 1.25%
------------ -------- -------- ------- --------
------------ -------- -------- ------- --------
Expenses................................................. .83% .96% 1.18% 1.28% 1.47%
------------ -------- -------- ------- --------
------------ -------- -------- ------- --------
Investment income (loss)--net............................ .27% (.05%) .04% .51% .14%
------------ -------- -------- ------- --------
------------ -------- -------- ------- --------
- ------------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA:
Net assets, end of year (in thousands)................... $170,044 $ 98,976 $ 23,167 $11,318 $ 6,851
------------ -------- -------- ------- --------
------------ -------- -------- ------- --------
Portfolio turnover....................................... 88.48% 131.75% 98.64% 79.10% 135.24%
------------ -------- -------- ------- --------
------------ -------- -------- ------- --------
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
* Based on average shares outstanding during the year.
** Total investment returns exclude insurance-related fees and expenses.
+ Amount is less than $.01 per share.
</TABLE>
See Notes to Financial Statements.
116
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH VARIABLE SERIES FUNDS, INC.
FINANCIAL HIGHLIGHTS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FLEXIBLE STRATEGY FUND
THE FOLLOWING PER SHARE DATA AND RATIOS HAVE BEEN DERIVED -------------------------------------------------------------------
FROM INFORMATION PROVIDED IN THE FINANCIAL STATEMENTS. FOR THE YEAR ENDED DECEMBER 31,
-------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSET VALUE: 1994* 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of year........................ $ 16.19 $ 14.15 $ 14.79 $ 12.55 $ 12.44
------------ -------- -------- ------- -------
Investment income (loss)--net............................. .37 .28 .33 .47 .65
Realized and unrealized gain (loss) on investments and
foreign currency transactions--net...................... (1.02) 1.94 .25 2.52 (.08)
------------ -------- -------- ------- -------
Total from investment operations.......................... (.65) 2.22 .58 2.99 .57
------------ -------- -------- ------- -------
Less dividends and distributions:
Investment income--net.................................. (.30) (.15) (.54) (.66) (.46)
Realized gain on investments--net....................... (.54) (.03) (.68) (.09) --
In excess of realized gain on investments--net -- -- -- -- --
------------ -------- -------- ------- -------
Total dividends and distributions......................... (.84) (.18) (1.22) (.75) (.46)
------------ -------- -------- ------- -------
Net asset value, end of year.............................. $ 14.70 $ 16.19 $ 14.15 $ 14.79 $ 12.55
------------ -------- -------- ------- -------
------------ -------- -------- ------- -------
- ------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT RETURN**:
Based on net asset value per share........................ (4.20%) 15.80% 4.25% 24.98% 4.81%
------------ -------- -------- ------- -------
------------ -------- -------- ------- -------
- ------------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
Expenses, net of reimbursement............................ .73% .80% .90% .96% 1.08%
------------ -------- -------- ------- -------
------------ -------- -------- ------- -------
Expenses.................................................. .73% .80% .90% .96% 1.08%
------------ -------- -------- ------- -------
------------ -------- -------- ------- -------
Investment income--net.................................... 2.52% 2.26% 2.62% 3.51% 5.19%
------------ -------- -------- ------- -------
------------ -------- -------- ------- -------
- ------------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA:
Net assets, end of year (in thousands).................... $274,498 $194,777 $ 82,549 $55,221 $47,428
------------ -------- -------- ------- -------
------------ -------- -------- ------- -------
Portfolio turnover........................................ 65.54% 56.42% 55.25% 67.13% 52.95%
------------ -------- -------- ------- -------
------------ -------- -------- ------- -------
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
* Based on average shares outstanding during the year.
** Total investment returns exclude insurance-related fees and expenses.
</TABLE>
See Notes to Financial Statements.
117
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH VARIABLE SERIES FUNDS, INC.
FINANCIAL HIGHLIGHTS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GLOBAL STRATEGY FOCUS FUND
---------------------------------------------------------------
THE FOLLOWING PER SHARE DATA AND RATIOS HAVE BEEN DERIVED FOR THE YEAR ENDED
FROM INFORMATION PROVIDED IN THE FINANCIAL STATEMENTS. DECEMBER 31, FOR THE PERIOD
--------------------------------------- FEBRUARY 28, 1992+
INCREASE (DECREASE) IN NET ASSET VALUE: 1994 1993 TO DECEMBER 31, 1992
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period..................... $ 12.17 $ 10.22 $ 10.00
---------- ----------------- ----------
Investment income (loss)--net............................ .30 .16 .13
Realized and unrealized gain (loss) on investments and
foreign currency transactions--net..................... (.48) 1.96 .13
---------- ----------------- ----------
Total from investment operations......................... (.18) 2.12 .26
---------- ----------------- ----------
Less dividends and distributions:
Investment income--net................................. (.21) (.17) (.04)
Realized gain on investments--net...................... (.04) -- --
In excess of realized gain on investments--net (.01) -- --
---------- ----------------- ----------
Total dividends and distributions........................ (.26) (.17) (.04)
---------- ----------------- ----------
Net asset value, end of period........................... $ 11.73 $ 12.17 $ 10.22
---------- ----------------- ----------
---------- ----------------- ----------
- ------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT RETURN**:
Based on net asset value per share....................... (1.46%) 21.03% 2.62%++
---------- ----------------- ----------
---------- ----------------- ----------
- ------------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
Expenses, net of reimbursement........................... .77% .88% 1.25%*
---------- ----------------- ----------
---------- ----------------- ----------
Expenses................................................. .77% .88% 1.35%*
---------- ----------------- ----------
---------- ----------------- ----------
Investment income--net................................... 2.85% 2.41% 2.66%*
---------- ----------------- ----------
---------- ----------------- ----------
- ------------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA:
Net assets, end of period (in thousands)................. $515,407 $ 269,627 $ 15,527
---------- ----------------- ----------
---------- ----------------- ----------
Portfolio turnover....................................... 21.03% 17.07% 14.47%
---------- ----------------- ----------
---------- ----------------- ----------
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
* Annualized.
** Total investment returns exclude insurance-related fees and expenses.
+ Commencement of Operations.
++ Aggregate total investment return.
</TABLE>
See Notes to Financial Statements.
118
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH VARIABLE SERIES FUNDS, INC.
FINANCIAL HIGHLIGHTS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GLOBAL UTILITY FOCUS FUND
-------------------------------------
THE FOLLOWING PER SHARE DATA AND RATIOS HAVE BEEN DERIVED FOR THE
FROM INFORMATION PROVIDED IN THE FINANCIAL STATEMENTS. YEAR ENDED FOR THE PERIOD
DECEMBER 31, JULY 1, 1993+ TO
INCREASE (DECREASE) IN NET ASSET VALUE: 1994 DECEMBER 31, 1993
<S> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period....................................... $ 10.66 $ 10.00
------------- -----------------
Investment income (loss)--net.............................................. .35 .04
Realized and unrealized gain (loss) on investments and foreign currency
transactions--net........................................................ (1.25) .64
------------- -----------------
Total from investment operations........................................... (.90) .68
------------- -----------------
Less dividends and distributions:
Investment income--net................................................... (.29) (.02)
Realized gain on investments--net........................................ -- --
In excess of realized gain on investments--net (.02) --
------------- -----------------
Total dividends and distributions.......................................... (.31) (.02)
------------- -----------------
Net asset value, end of period............................................. $ 9.45 $ 10.66
------------- -----------------
------------- -----------------
- ----------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT RETURN**:
Based on net asset value per share......................................... (8.51%) 6.85%++
------------- -----------------
------------- -----------------
- ----------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
Expenses, net of reimbursement............................................. .73% .89%*
------------- -----------------
------------- -----------------
Expenses................................................................... .73% .89%*
------------- -----------------
------------- -----------------
Investment income--net..................................................... 3.68% 2.84%*
------------- -----------------
------------- -----------------
- ----------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA:
Net assets, end of period (in thousands)................................... $ 126,243 $ 104,517
------------- -----------------
------------- -----------------
Portfolio turnover......................................................... 9.52% 1.72%
------------- -----------------
------------- -----------------
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
* Annualized.
** Total investment returns exclude insurance-related fees and expenses.
+ Commencement of Operations.
++ Aggregate total investment return.
</TABLE>
See Notes to Financial Statements.
119
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH VARIABLE SERIES FUNDS, INC.
FINANCIAL HIGHLIGHTS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
HIGH CURRENT INCOME FUND
THE FOLLOWING PER SHARE DATA AND RATIOS HAVE BEEN DERIVED -------------------------------------------------------------------
FROM INFORMATION PROVIDED IN THE FINANCIAL STATEMENTS. FOR THE YEAR ENDED DECEMBER 31,
-------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSET VALUE: 1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of year........................ $ 12.06 $ 11.13 $ 10.23 $ 8.14 $ 10.21
------------ -------- -------- ------- -------
Investment income (loss)--net............................. 1.05 .95 1.07 1.19 1.40
Realized and unrealized gain (loss) on investments and
foreign currency transactions--net...................... (1.47) .95 .90 2.10 (2.08)
------------ -------- -------- ------- -------
Total from investment operations.......................... (.42) 1.90 1.97 3.29 (.68)
------------ -------- -------- ------- -------
Less dividends and distributions:
Investment income--net.................................. (1.03) (.97) (1.07) (1.20) (1.39)
Realized gain on investments--net....................... -- -- -- -- --
------------ -------- -------- ------- -------
Total dividends and distributions......................... (1.03) (.97) (1.07) (1.20) (1.39)
------------ -------- -------- ------- -------
Net asset value, end of year.............................. $ 10.61 $ 12.06 $ 11.13 $ 10.23 $ 8.14
------------ -------- -------- ------- -------
------------ -------- -------- ------- -------
- ------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT RETURN*:
Based on net asset value per share........................ (3.59%) 17.84% 20.05% 43.00% (7.63%)
------------ -------- -------- ------- -------
------------ -------- -------- ------- -------
- ------------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
Expenses, net of reimbursement............................ .61% .72% .89% 1.10% 1.15%
------------ -------- -------- ------- -------
------------ -------- -------- ------- -------
Expenses.................................................. .61% .72% .89% 1.10% 1.15%
------------ -------- -------- ------- -------
------------ -------- -------- ------- -------
Investment income--net.................................... 9.73% 8.62% 10.06% 12.49% 14.52%
------------ -------- -------- ------- -------
------------ -------- -------- ------- -------
- ------------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA:
Net assets, end of year (in thousands).................... $255,719 $163,428 $ 26,343 $ 9,649 $ 8,106
------------ -------- -------- ------- -------
------------ -------- -------- ------- -------
Portfolio turnover........................................ 51.88% 35.67% 28.21% 51.54% 26.43%
------------ -------- -------- ------- -------
------------ -------- -------- ------- -------
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
* Total investment returns exclude insurance-related fees and expenses.
</TABLE>
See Notes to Financial Statements.
120
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH VARIABLE SERIES FUNDS, INC.
FINANCIAL HIGHLIGHTS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INTERMEDIATE GOVERNMENT
BOND FUND
THE FOLLOWING PER SHARE DATA AND RATIOS HAVE BEEN DERIVED --------------------------
FROM INFORMATION PROVIDED IN THE FINANCIAL STATEMENTS. FOR THE PERIOD MAY 2,
1994+
INCREASE (DECREASE) IN NET ASSET VALUE: TO DECEMBER 31,1994
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period.................................................. $ 10.00
------------
Investment income (loss)--net......................................................... .25
Realized and unrealized gain (loss) on investments and foreign currency
transactions--net................................................................... (.07)
------------
Total from investment operations...................................................... .18
------------
Less dividends and distributions:
Investment income--net.............................................................. (.21)
Realized gain on investments--net................................................... --
------------
Total dividends and distributions..................................................... (.21)
------------
Net asset value, end of period........................................................ $ 9.97
------------
------------
- ------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT RETURN**:
Based on net asset value per share.................................................... 1.79%++
------------
------------
- ------------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
Expenses, net of reimbursement........................................................ .00%*
------------
------------
Expenses.............................................................................. .80%*
------------
------------
Investment income--net................................................................ 4.66%*
------------
------------
- ------------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA:
Net assets, end of period (in thousands).............................................. $ 17,811
------------
------------
Portfolio turnover.................................................................... 103.03%
------------
------------
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
* Annualized.
** Total investment returns exclude insurance-related fees and expenses.
+ Commencement of Operations.
++ Aggregate total investment return.
</TABLE>
See Notes to Financial Statements.
121
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH VARIABLE SERIES FUNDS, INC.
FINANCIAL HIGHLIGHTS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
THE FOLLOWING PER SHARE DATA AND RATIOS HAVE BEEN DERIVED INTERNATIONAL BOND FUND
FROM INFORMATION PROVIDED IN THE FINANCIAL STATEMENTS. ---------------------------
FOR THE PERIOD MAY 2, 1994+
INCREASE (DECREASE) IN NET ASSET VALUE: TO DECEMBER 31, 1994
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period................................................. $ 10.00
----------
Investment income (loss)--net........................................................ .38
Realized and unrealized gain (loss) on investments and foreign currency
transactions--net.................................................................. (.35)
----------
Total from investment operations..................................................... .03
----------
Less dividends and distributions:
Investment income--net............................................................. (.33)
Realized gain on investments--net.................................................. --
----------
Total dividends and distributions.................................................... (.33)
----------
Net asset value, end of period....................................................... $ 9.70
----------
----------
- ------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT RETURN**:
Based on net asset value per share................................................... 0.37%++
----------
----------
- ------------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
Expenses, net of reimbursement....................................................... .00%*
----------
----------
Expenses............................................................................. 1.08%*
----------
----------
Investment income--net............................................................... 6.34%*
----------
----------
- ------------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA:
Net assets, end of period (in thousands)............................................. $ 9,933
----------
----------
Portfolio turnover................................................................... 152.20%
----------
----------
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
* Annualized.
** Total investment returns exclude insurance-related fees and expenses.
+ Commencement of Operations.
++ Aggregate total investment return.
</TABLE>
See Notes to Financial Statements.
122
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH VARIABLE SERIES FUNDS, INC.
FINANCIAL HIGHLIGHTS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INTERNATIONAL EQUITY FOCUS FUND
THE FOLLOWING PER SHARE DATA AND RATIOS HAVE BEEN DERIVED ------------------------------------------
FROM INFORMATION PROVIDED IN THE FINANCIAL STATEMENTS. FOR THE YEAR FOR THE PERIOD
ENDED JULY 1, 1993+ TO
INCREASE (DECREASE) IN NET ASSET VALUE: DECEMBER 31, 1994 DECEMBER 31, 1993
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period.................................... $ 11.03 $ 10.00
---------- --------
Investment income (loss)--net........................................... .19 .01
Realized and unrealized gain (loss) on investments and foreign currency
transactions--net..................................................... (.13) 1.02
---------- --------
Total from investment operations........................................ .06 1.03
---------- --------
Less dividends and distributions:
Investment income--net................................................ (.18) --
Realized gain on investments--net..................................... (.01) --
---------- --------
Total dividends and distributions....................................... (.19) --
---------- --------
Net asset value, end of period.......................................... $ 10.90 $ 11.03
---------- --------
---------- --------
- ------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT RETURN**:
Based on net asset value per share...................................... 0.55% 10.30%++
---------- --------
---------- --------
- ------------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
Expenses, net of reimbursement.......................................... .97% 1.14%*
---------- --------
---------- --------
Expenses................................................................ .97% 1.14%*
---------- --------
---------- --------
Investment income--net.................................................. 1.09% .30%*
---------- --------
---------- --------
- ------------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA:
Net assets, end of period (in thousands)................................ $247,884 $76,906
---------- --------
---------- --------
Portfolio turnover...................................................... 58.84% 17.39%
---------- --------
---------- --------
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
* Annualized.
** Total investment returns exclude insurance-related fees and expenses.
+ Commencement of Operations.
++ Aggregate total investment return.
</TABLE>
See Notes to Financial Statements.
123
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH VARIABLE SERIES FUNDS, INC.
FINANCIAL HIGHLIGHTS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NATURAL RESOURCES FOCUS FUND
THE FOLLOWING PER SHARE DATA AND RATIOS HAVE BEEN DERIVED FROM --------------------------------------------------------------
INFORMATION PROVIDED IN THE FINANCIAL STATEMENTS. FOR THE YEAR ENDED DECEMBER 31,
--------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSET VALUE: 1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of year............................. $ 10.82 $ 9.84 $ 10.06 $ 10.17 $ 11.09
------- -------- -------- ------- -------
Investment income (loss)--net.................................. .17 .11 .18 .25 .22
Realized and unrealized gain (loss) on investments and foreign
currency transactions--net................................... (.02) .92 (.05) (.11) (.90)
------- -------- -------- ------- -------
Total from investment operations............................... .15 1.03 .13 .14 (.68)
------- -------- -------- ------- -------
Less dividends and distributions:
Investment income--net....................................... (.15) (.05) (.29) (.25) (.24)
Realized gain on investments--net............................ -- -- (.06) -- --
------- -------- -------- ------- -------
Total dividends and distributions.............................. (.15) (.05) (.35) (.25) (.24)
------- -------- -------- ------- -------
Net asset value, end of year................................... $ 10.82 $ 10.82 $ 9.84 $ 10.06 $ 10.17
------- -------- -------- ------- -------
------- -------- -------- ------- -------
- ------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT RETURN*:
Based on net asset value per share............................. 1.44% 10.47% 1.36% 1.36% (6.21%)
------- -------- -------- ------- -------
------- -------- -------- ------- -------
- ------------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
Expenses, net of reimbursement................................. .87% 1.13% 1.25% 1.25% 1.25%
------- -------- -------- ------- -------
------- -------- -------- ------- -------
Expenses....................................................... .87% 1.13% 1.27% 1.30% 1.38%
------- -------- -------- ------- -------
------- -------- -------- ------- -------
Investment income--net......................................... 1.91% 1.34% 2.00% 2.31% 2.26%
------- -------- -------- ------- -------
------- -------- -------- ------- -------
- ------------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA:
Net assets, end of year (in thousands)......................... $39,715 $ 14,778 $ 4,144 $ 3,084 $ 3,247
------- -------- -------- ------- -------
------- -------- -------- ------- -------
Portfolio turnover............................................. 10.94% 58.44% 22.88% 31.38% 27.61%
------- -------- -------- ------- -------
------- -------- -------- ------- -------
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
* Total investment returns exclude insurance-related fees and expenses.
</TABLE>
See Notes to Financial Statements.
124
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH VARIABLE SERIES FUNDS, INC.
FINANCIAL HIGHLIGHTS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRIME BOND FUND
THE FOLLOWING PER SHARE DATA AND RATIOS HAVE BEEN DERIVED ------------------------------------------------------------
FROM INFORMATION PROVIDED IN THE FINANCIAL STATEMENTS. FOR THE YEAR ENDED DECEMBER 31,
------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSET VALUE: 1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of year........................... $ 12.64 $ 12.04 $ 12.02 $ 11.18 $ 11.29
-------- -------- -------- -------- --------
Investment income (loss)--net................................ .77 .70 .79 .90 .88
Realized and unrealized gain (loss) on investments and
foreign currency transactions--net......................... (1.36) .71 .04 .84 (.12)
-------- -------- -------- -------- --------
Total from investment operations............................. (.59) 1.41 .83 1.74 .76
-------- -------- -------- -------- --------
Less dividends and distributions:
Investment income--net..................................... (.76) (.70) (.81) (.90) (.87)
Realized gain on investments--net.......................... -- (.11) -- -- --
In excess of realized gain on investments--net............. (.17) -- -- -- --
-------- -------- -------- -------- --------
Total dividends and distributions............................ (.93) (.81) (.81) (.90) (.87)
-------- -------- -------- -------- --------
Net asset value, end of year................................. $ 11.12 $ 12.64 $ 12.04 $ 12.02 $ 11.18
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
- ------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT RETURN*:
Based on net asset value per share........................... (4.80%) 12.02% 7.27% 16.41% 7.13%
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
- ------------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
Expenses, net of reimbursement............................... .54% .63% .78% .78% 1.06%
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Expenses..................................................... .54% .63% .78% .78% 1.06%
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Investment income--net....................................... 6.74% 5.86% 6.76% 7.94% 8.01%
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
- ------------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA:
Net assets, end of year (in thousands)....................... $391,234 $314,091 $ 84,810 $ 39,743 $ 34,655
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Portfolio turnover........................................... 139.89% 115.26% 82.74% 152.18% 155.17%
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
* Total investment returns exclude insurance-related fees and expenses.
</TABLE>
See Notes to Financial Statements.
125
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH VARIABLE SERIES FUNDS, INC.
FINANCIAL HIGHLIGHTS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
QUALITY EQUITY FUND
THE FOLLOWING PER SHARE DATA AND RATIOS HAVE BEEN DERIVED ----------------------------------------------------------
FROM INFORMATION PROVIDED IN THE FINANCIAL STATEMENTS. FOR THE YEAR ENDED DECEMBER 31,
----------------------------------------------------------
INCREASE (DECREASE) IN NET ASSET VALUE: 1994* 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of year.............................. $ 29.02 $ 25.48 $ 26.35 $ 21.72 $ 22.88
-------- -------- -------- ------- -------
Investment income (loss)--net................................... .38 .24 .34 .43 .47
Realized and unrealized gain (loss) on investments and foreign
currency transactions--net.................................... (.74) 3.46 .32 5.75 (.38)
-------- -------- -------- ------- -------
Total from investment operations................................ (.36) 3.70 .66 6.18 .09
-------- -------- -------- ------- -------
Less dividends and distributions:
Investment income--net........................................ (.25) (.12) (.58) (.50) (.41)
Realized gain on investments--net............................. (.67) (.04) (.95) (1.05) (.84)
-------- -------- -------- ------- -------
Total dividends and distributions............................... (.92) (.16) (1.53) (1.55) (1.25)
-------- -------- -------- ------- -------
Net asset value, end of year.................................... $ 27.74 $ 29.02 $ 25.48 $ 26.35 $ 21.72
-------- -------- -------- ------- -------
-------- -------- -------- ------- -------
- ------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT RETURN**:
Based on net asset value per share.............................. (1.20%) 14.57% 2.69% 30.18% .66%
-------- -------- -------- ------- -------
-------- -------- -------- ------- -------
- ------------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
Expenses, net of reimbursement.................................. .54% .62% .74% .79% .94%
-------- -------- -------- ------- -------
-------- -------- -------- ------- -------
Expenses........................................................ .54% .62% .74% .79% .94%
-------- -------- -------- ------- -------
-------- -------- -------- ------- -------
Investment income--net.......................................... 1.39% 1.07% 1.54% 1.87% 2.36%
-------- -------- -------- ------- -------
-------- -------- -------- ------- -------
- ------------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA:
Net assets, end of year (in thousands).......................... $464,360 $309,420 $ 87,977 $55,005 $39,470
-------- -------- -------- ------- -------
-------- -------- -------- ------- -------
Portfolio turnover.............................................. 60.57% 88.25% 62.54% 55.83% 69.05%
-------- -------- -------- ------- -------
-------- -------- -------- ------- -------
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
* Based on average shares outstanding during the year.
** Total investment returns exclude insurance-related fees and expenses.
</TABLE>
See Notes to Financial Statements.
126
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH VARIABLE SERIES FUNDS, INC.
FINANCIAL HIGHLIGHTS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
RESERVE ASSETS FUND
THE FOLLOWING PER SHARE DATA AND RATIOS HAVE BEEN DERIVED ---------------------------------------------------------------
FROM INFORMATION PROVIDED IN THE FINANCIAL STATEMENTS. FOR THE YEAR ENDED DECEMBER 31,
---------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSET VALUE: 1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of year............................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- ------- -------
Investment income (loss)--net................................. .0371 .0268 .0320 .0546 .0730
Realized and unrealized gain (loss) on investments and foreign
currency transactions--net.................................. (.0009) .0005 .0007 .0014 .0019
-------- -------- -------- ------- -------
Total from investment operations.............................. .0362 .0273 .0327 .0560 .0749
-------- -------- -------- ------- -------
Less dividends and distributions:
Investment income--net...................................... (.0362) (.0268) (.0320) (.0546) (.0730)
Realized gain on investments--net........................... -- (.0005) (.0005) (.0014)+ (.0019)+
-------- -------- -------- ------- -------
Total dividends and distributions............................. (.0362) (.0273) (.0325) (.0560) (.0749)
-------- -------- -------- ------- -------
Net asset value, end of year.................................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- ------- -------
-------- -------- -------- ------- -------
- ------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT RETURN*:
Based on net asset value per share............................ 3.80% 2.77% 3.29% 5.68% 7.65%
-------- -------- -------- ------- -------
-------- -------- -------- ------- -------
- ------------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
Expenses...................................................... .65% .70% .79% .79% .97%
-------- -------- -------- ------- -------
-------- -------- -------- ------- -------
Investment income--net, and realized gain (loss)
on investments--net......................................... 3.75% 2.73% 3.36% 5.64% 7.46%
-------- -------- -------- ------- -------
-------- -------- -------- ------- -------
- ------------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA:
Net assets, end of year (in thousands)........................ $ 32,196 $ 30,168 $ 26,767 $34,362 $35,871
-------- -------- -------- ------- -------
-------- -------- -------- ------- -------
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
+ Includes unrealized gain (loss). (See Note 1g).
* Total investment returns exclude insurance-related fees and expenses.
</TABLE>
See Notes to Financial Statements.
127
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH VARIABLE SERIES FUNDS, INC.
FINANCIAL HIGHLIGHTS (CONCLUDED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
WORLD INCOME FOCUS FUND
THE FOLLOWING PER SHARE DATA AND RATIOS HAVE BEEN DERIVED ------------------------------------------
FROM INFORMATION PROVIDED IN THE FINANCIAL STATEMENTS. FOR THE YEAR FOR THE PERIOD
ENDED JULY 1, 1993+ TO
INCREASE (DECREASE) IN NET ASSET VALUE: DECEMBER 31, 1994 DECEMBER 31, 1993
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period.................................... $ 10.38 $ 10.00
---------- --------
Investment income (loss)--net........................................... .76 .25
Realized and unrealized gain (loss) on investments and foreign currency
transactions--net..................................................... (1.19) .33
---------- --------
Total from investment operations........................................ (.43) .58
---------- --------
Less dividends and distributions:
Investment income--net................................................ (.76) (.20)
Realized gain on investments--net..................................... -- --
In excess of realized gain on investments--net........................ (.02) --
---------- --------
Total dividends and distributions....................................... (.78) (.20)
---------- --------
Net asset value, end of period.......................................... $ 9.17 $ 10.38
---------- --------
---------- --------
- ------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT RETURN**:
Based on net asset value per share...................................... (4.21%) 5.90%++
---------- --------
---------- --------
- ------------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
Expenses, net of reimbursement.......................................... .75% .94%*
---------- --------
---------- --------
Expenses................................................................ .75% .94%*
---------- --------
---------- --------
Investment income--net.................................................. 8.01% 6.20%*
---------- --------
---------- --------
- ------------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA:
Net assets, end of period (in thousands)................................ $ 75,150 $50,737
---------- --------
---------- --------
Portfolio turnover...................................................... 117.58% 54.80%
---------- --------
---------- --------
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
* Annualized.
** Total investment returns exclude insurance-related fees and expenses.
+ Commencement of Operations.
++ Aggregate total investment return.
</TABLE>
See Notes to Financial Statements.
128
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH VARIABLE SERIES FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS
- ---------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES:
Merrill Lynch Variable Series Funds, Inc. (the 'Company') is an open-end
management investment company which is comprised of 17 separate funds ('Funds'
or 'Fund') offering 17 separate classes of shares to the Merrill Lynch Life
Insurance Company, ML Life Insurance Company of New York (indirect wholly-owned
subsidiaries of Merrill Lynch & Co., Inc. 'ML & Co.'), and Family Life Insurance
Company (an insurance company not affiliated with ML & Co.) for their separate
accounts to fund benefits under certain variable annuity contracts. Each Fund is
classified as 'diversified', as defined in the Investment Company Act of 1940,
except for Developing Capital Markets Fund, Global Strategy Focus Fund,
International Bond Fund, Natural Resources Focus Fund and the World Income Focus
Fund, all of which are classified as 'non-diversified.' The following is a
summary of significant accounting policies followed by the Funds.
(a) Valuation of investments--Money market securities 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 the 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 value.
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 closing bid price. Securities traded in the
over-the-counter market are valued at the bid price or yield equivalent as
obtained from one or more dealers that make markets in such 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. Futures contracts are valued at settlement price at the
close of the applicable exchange. Securities 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 Company.
Options which are traded on exchanges are valued at the last bid price in the
case of options purchased and last asked price in the case of options written.
(b) Derivative financial instruments--The Fund may engage in various
portfolio strategies to seek to increase its returns by hedging its portfolio
against adverse movements in the equity, debt and currency markets. Losses may
arise due to changes in the value of the contract or if the counterparty does
not perform under the contract.
*Forward foreign exchange contracts--Certain Funds 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
Fund's records. However, the effect on net investment income is recorded from
the date the Fund enters into such contracts. Premiums or discount is amortized
over the life of the contracts.
*Options--Certain Funds may write or purchase call options and put options. When
a Fund writes an option, an amount equal to the premium received by the Fund is
reflected as an asset and an equivalent liability. The amount of the liability
is subsequently marked to market to reflect the current value of the option
written.
When a security is sold through an exercise of an option, the related premium
received (or paid) is deducted from (or added to) the basis 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 exceeds the premium paid or received).
*Foreign currency options and futures--Certain Funds may also purchase or sell
listed or over-the-counter foreign currency options, foreign currency futures
and related options on foreign currency futures as a short or long hedge
against possible variations in foreign exchange rates. Such transactions may be
effected with respect to hedges on non-US dollar denominated securities owned
by the Fund, sold by the Fund but not yet delivered, or committed or
anticipated to be purchased by the Fund.
*Futures contracts--Certain Funds may purchase or sell futures contracts and
options on such futures contracts. Upon entering into a contract, the Fund
deposits and maintains as collateral such initial margin as required by the
exchange on which the transactions is effected. Pursuant to the contract, the
Fund agrees to receive from or pay to the broker an amount of cash equal to the
daily fluctuation in value of the contract. Such receipts or payments are known
as variation margin and are recorded by the Fund as unrealized gains or losses.
When the contract is closed, the Fund records a realized gain or loss equal to
the difference between the value of the contract at the time it was opened and
the value at the time it was closed.
Written and purchased options are non-income producing investments.
(c) 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 valued at the exchange
rate at the end of the period. Foreign currency transactions are the result of
settling (realized)
129
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
or valuing (unrealized) assets or liabilities expressed in foreign currencies
into US dollars. Realized and unrealized gains or losses from investments
include the effects of foreign exchange rates on investments.
(d) Income taxes--It is the Company'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.
(e) 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.
(f) Deferred organization expenses and prepaid registration fees--Deferred
organization expenses are charged to expense on a straight-line basis over a
five-year period. Prepaid registration fees are charged to expense as the
related shares are issued.
(g) Dividends and distributions--Dividends and distributions paid by the
Funds are recorded on the ex-dividend dates.
2. INVESTMENT ADVISORY AGREEMENT AND TRANSACTIONS WITH AFFILIATES:
The Company has entered into an Investment Advisory Agreement with Merrill Lynch
Asset Management, L.P. ('MLAM'). The general partner of MLAM is Princeton
Services, Inc. ('PSI'), an indirect, wholly-owned subsidiary of ML & Co., which
is the limited partner. MLAM is responsible for the management of the Company's
portfolios and provides the necessary personnel, facilities, equipment and
certain other services necessary to the operations of the Funds.
For such services, the Company pays a monthly fee based upon the average
daily value of each Fund's net assets at the following annual rates: 0.75% of
the average daily net assets of the Equity Growth Fund, 0.65% of the average
daily net assets of each of the Flexible Strategy Fund, Natural Resources Focus
Fund and Global Strategy Focus Fund, 0.55% of the average daily net assets of
the American Balanced Fund, 0.50% of the average daily net assets of the
Domestic Money Market Fund, 0.60% of the average daily net assets of the Basic
Value Focus Fund, 0.60% of the average daily net assets of the International
Bond Fund, 0.60% of the average daily net assets of the World Income Focus Fund,
0.60% of the average daily net assets of the Global Utility Focus Fund, 0.75% of
the average daily net assets of the International Equity Focus Fund, 1.00% of
the average daily net assets of the Developing Capital Markets Focus Fund and
0.50% of the average daily net assets of the Intermediate Government Bond Fund,
and at the following annual rates with respect to the other Funds:
<TABLE>
<CAPTION>
RESERVE ASSETS FUND
Portion of average daily value of net
assets of the Fund:
- -------------------------------------------------
ADVISORY
FEE
<S> <C>
- -------------------------------------------------
Not exceeding $500 million............ 0.500%
In excess of $500 million but not
exceeding $750 million................ 0.425%
In excess of $750 million but not
exceeding $1 billion.................. 0.375%
- -------------------------------------------------
QUALITY EQUITY FUND
- -------------------------------------------------
Portion of average daily value of net
assets of the Fund:
Not exceeding $250 million............ 0.500%
In excess of $250 million but not
exceeding $300 million................ 0.450%
In excess of $300 million but not
exceeding $400 million................ 0.425%
In excess of $400 million............. 0.400%
- -------------------------------------------------
PRIME BOND FUND AND HIGH CURRENT
INCOME FUND
- -------------------------------------------------
PORTION OF AGGREGATE AVERAGE DAILY
VALUE OF NET ASSETS OF BOTH FUNDS:
</TABLE>
<TABLE>
<CAPTION>
ADVISORY FEE
- ----------------------------------------------------------
HIGH CURRENT PRIME
INCOME BOND
FUND FUND
<S> <C> <C>
- ----------------------------------------------------------
Not exceeding $250 million......... 0.55% 0.50 %
In excess of $250 million but not
more than $500 million............. 0.50% 0.45 %
- ----------------------------------------------------------
</TABLE>
The Investment Advisory Agreement obligates MLAM to reimburse the Company, if
in any year the aggregate ordinary operating expenses of any Fund exceed the
most restrictive expense limitations then in effect under any state securities
laws or the regulations thereunder. Under the most restrictive state regulations
presently in effect, the Investment Adviser would be required to reimburse each
Fund for advisory fees received by it from the Fund, to the extent that such
Fund's aggregate ordinary operating expenses (excluding interest, taxes,
brokerage fees and commissions, and extraordinary items) exceed in any fiscal
year 2.5% of each Fund's first $30 million of average daily net assets, 2.0% of
the Fund's next $70 million of average daily net assets, and 1.5% of average
daily net assets in excess thereof. In addition, the Investment Adviser, MLAM,
and Merrill Lynch Life Agency, Inc. ('MLLA') have entered into an agreement
which limits the operating expenses paid by each Fund to 1.25% of its average
daily net assets. Any expenses in excess of 1.25% of average daily net assets
will be reimbursed to the Fund by the Investment Adviser which, in turn, will be
reimbursed by MLLA.
For Developing Capital Markets Focus Fund for the period May 2, 1994 to
December 31, 1994, MLAM
130
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
earned fees of $151,621, of which $8,915 was voluntarily waived.
For Domestic Money Market Fund for the year ended December 31, 1994, MLAM
earned fees of $1,418,479, of which $201,286 was voluntarily waived.
For Intermediate Government Bond Fund for the period May 2, 1994 to December
31, 1994, MLAM earned fees of $31,692, all of which was voluntarily waived. MLAM
has also reimbursed the Fund $19,250 in additional expenses.
For the International Bond Fund for the period May 2, 1994 to December 31,
1994, MLAM earned fees of $30,838, all of which was voluntarily waived. MLAM has
also reimbursed the Fund for $24,637 in additional expenses.
Merrill Lynch, Pierce, Fenner & Smith Inc. ('MLPF&S'), an affiliate of MLIM,
earned commissions on the execution of portfolio security transactions
aggregating $10,806 in the American Balance Fund, $18,504 in the Basic Value
Focus Fund, $5,501 in the Developing Capital Markets Focus Fund, $4,020 in the
Equity Growth Fund, $29,097 in the Flexible Strategy Fund, $44,456 in the Global
Strategy Focus Fund, $2,346 in the Global Utility Focus Fund, $33,386 in the
International Equity Focus Fund, $1,344 in the Natural Resources Focus Fund,
$58,618 in the Quality Equity Fund, and $625 in the World Income Focus Fund.
Accounting services are provided to the Company by MLAM at cost.
American Balanced Fund, Global Utility Focus Fund, High Current Income Fund,
Intermediate Government Bond Fund, Prime Bond Fund and World Income Focus Fund
paid Merrill Lynch Security Pricing Service, an affiliate of MLPF&S, $879,
$7,173, $16,562, $200, $1,472, and $5,070, respectively, for security price
quotations to compute the net asset value of the Fund.
Financial Data Services, Inc. ('FDS'), a wholly-owned subsidiary of ML & Co.,
is the company's transfer agent.
Certain officers and/or directors of the Company are officers and/or
directors of MLAM, PSI, FDS, Merrill Lynch Funds Distributor, Inc., a
wholly-owned subsidiary of Merrill Lynch Group, Inc., which is the Fund's
distributor, and/or ML & Co.
3. INVESTMENTS:
Purchases and sales of investments, excluding short-term securities for the year
ended December 31, 1994, were as follows:
<TABLE>
<S> <C> <C>
PURCHASES SALES
- ----------------------------------------------------------
American Balanced Fund............................ $ 113,205,848 $ 47,004,890
Basic Value Focus Fund............................ 179,580,610 62,940,173
Developing Capital Markets Focus Fund............. 35,559,221 4,471,508
Domestic Money Market Fund........................ -- --
Equity Growth Fund................................ 186,468,001 109,194,836
Flexible Strategy Fund............................ 193,165,367 130,314,357
Global Strategy Focus Fund........................ 385,300,323 85,076,823
Global Utility Focus Fund......................... 60,441,616 9,826,860
High Current Income Fund.......................... 222,031,621 107,197,912
Intermediate Government Bond Fund................. 4,079,287 1,445,980
International Bond Focus Fund..................... 15,849,508 7,568,834
International Equity Focus Fund................... 244,503,377 90,821,367
Natural Resources Focus Fund...................... 23,122,635 2,472,626
Prime Bond Fund................................... 573,637,572 461,357,101
Quality Equity Fund............................... 304,407,076 204,149,998
Reserve Assets Fund............................... -- --
World Income Focus Fund........................... 93,538,055 70,565,612
- ----------------------------------------------------------
</TABLE>
Transactions in options written for the year ended December 31, 1994, were as
follows:
<TABLE>
<S> <C> <C>
FLEXIBLE STRATEGY FUND
- ----------------------------------------------------------
<CAPTION>
SHARES PREMIUMS
CALL OPTIONS WRITTEN COVERED RECEIVED
<S> <C> <C>
- ----------------------------------------------------------
Outstanding call options written, beginning of
year.......................................... -- --
Options written................................ 21,500 $ 26,693
Options closed................................. (500) (891)
Options exercised.............................. (5,000) (5,274)
-------------- ------------
Outstanding call options written, end of
year.......................................... 16,000 $ 20,528
-------------- ------------
-------------- ------------
- ----------------------------------------------------------
INTERNATIONAL EQUITY FOCUS FUND
- ----------------------------------------------------------
<CAPTION>
NUMBER
OF PREMIUMS
CALL OPTIONS WRITTEN CONTRACTS RECEIVED
<S> <C> <C>
- ----------------------------------------------------------
Outstanding call options written, beginning of
year.......................................... 1 $ 15,500
Options written................................ 12 575,993
Options expired................................ (5) (148,143)
Options closed................................. (5) (86,250)
-------------- ------------
Outstanding call options written end of year... 3 $ 357,100
-------------- ------------
-------------- ------------
- ----------------------------------------------------------
<CAPTION>
NUMBER
OF PREMIUMS
PUT OPTIONS WRITTEN CONTRACTS RECEIVED
<S> <C> <C>
- ----------------------------------------------------------
Outstanding put options written, beginning of
year.......................................... 4 $ 103,350
Options written................................ 5 277,979
Options expired................................ (3) (67,405)
Options closed................................. (3) (98,102)
-------------- ------------
Outstanding put options written, end of year... 3 $ 215,822
-------------- ------------
-------------- ------------
- ----------------------------------------------------------
</TABLE>
131
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
QUALITY EQUITY FUND
- ----------------------------------------------------------
NUMBER OF
SHARES PREMIUMS
CALL OPTIONS WRITTEN COVERED RECEIVED
<S> <C> <C>
- ----------------------------------------------------------
Outstanding call options written, beginning of
year.......................................... -- --
Options written................................ 49,700 $ 57,999
Options closed................................. (21,000) (22,832)
-------------- ------------
Outstanding call options written, end of
year.......................................... 28,700 $ 35,167
-------------- ------------
-------------- ------------
- ----------------------------------------------------------
WORLD INCOME FOCUS FUND
- ----------------------------------------------------------
<CAPTION>
NUMBER OF PREMIUMS
CALL OPTIONS WRITTEN CONTRACTS RECEIVED
<S> <C> <C>
- ----------------------------------------------------------
Outstanding call options written, beginning of
year.......................................... -- --
Options written................................ 2 $ 10,100
-------------- ------------
Outstanding call options written, end of
year.......................................... 2 $ 10,100
-------------- ------------
-------------- ------------
- ----------------------------------------------------------
</TABLE>
At December 31, 1994, net unrealized appreciation/depreciation and aggregate
cost for Federal income tax purposes were as follows:
<TABLE>
<CAPTION>
DEVELOPING
BASIC CAPITAL DOMESTIC
AMERICAN VALUE MARKETS MONEY
BALANCED FOCUS FOCUS MARKET
FUND FUND FUND FUND
<S> <C> <C> <C> <C>
- ----------------------------------------------------------
Appreciated
securities............. $ 5,377,922 $ 7,250,050 $ 1,389,196 --
Depreciated
securities............. (11,559,561) (12,127,815) (3,734,745) $ (196,315)
------------ ------------ ----------- ------------
Net unrealized
depreciation........... $ (6,181,639) $ (4,877,765) $(2,345,549) $ (196,315)
------------ ------------ ----------- ------------
------------ ------------ ----------- ------------
Cost for Federal income
tax purposes*.......... $163,046,195 $168,786,131 $40,275,572 $369,315,441
------------ ------------ ----------- ------------
------------ ------------ ----------- ------------
- ----------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
GLOBAL GLOBAL
EQUITY FLEXIBLE STRATEGY UTILITY
GROWTH STRATEGY FOCUS FOCUS
FUND FUND FUND FUND
<S> <C> <C> <C> <C>
- ----------------------------------------------------------
Appreciated securities.... $ 12,859,867 $ 14,334,233 $ 19,946,186 $ 3,330,334
Depreciated securities.... (10,215,739) (13,622,415) (32,174,422) (15,013,594)
------------ ------------ ------------- ------------
Net unrealized
appreciation
(depreciation)............ $ 2,644,128 $ 711,818 $ (12,228,236) $(11,683,260)
------------ ------------ ------------- ------------
------------ ------------ ------------- ------------
Cost for Federal income
tax purposes*............. $167,284,987 $272,988,599 $ 524,369,249 $137,874,783
------------ ------------ ------------- ------------
------------ ------------ ------------- ------------
- ----------------------------------------------------------
<CAPTION>
HIGH INTERMEDIATE INTERNATIONAL
CURRENT GOVERNMENT INTERNATIONAL EQUITY
INCOME BOND BOND FOCUS
FUND FUND FUND FUND
<S> <C> <C> <C> <C>
- ----------------------------------------------------------
Appreciated securities.... $ 809,848 $ 10,120 $ 48,465 $ 7,392,821
Depreciated securities.... (25,408,864) (70,862) (144,933) (14,915,053)
------------ ------------ ------------- ------------
Net unrealized
depreciation.............. $(24,599,016) $ (60,742) $ (96,468) $ (7,522,232)
------------ ------------ ------------- ------------
------------ ------------ ------------- ------------
Cost for Federal income
tax purposes*............. $273,516,227 $ 17,635,984 $ 10,713,571 $251,213,493
------------ ------------ ------------- ------------
------------ ------------ ------------- ------------
- ----------------------------------------------------------
<CAPTION>
NATURAL
RESOURCES PRIME QUALITY RESERVE
FOCUS BOND EQUITY ASSETS
FUND FUND FUND FUND
<S> <C> <C> <C> <C>
- ----------------------------------------------------------
Appreciated securities.... $ 1,673,801 $ 179,070 $ 36,163,539 --
Depreciated securities.... (2,547,781) (22,272,625) (23,217,895) $ (27,924)
------------ ------------ ------------- ------------
Net unrealized
appreciation
(depreciation)............ $ (873,980) $(22,093,555) $ 12,945,644 $ (27,924)
------------ ------------ ------------- ------------
------------ ------------ ------------- ------------
Cost for Federal income
tax purposes*............. $ 40,329,553 $406,893,235 $ 451,837,771 $ 32,698,577
------------ ------------ ------------- ------------
------------ ------------ ------------- ------------
- ----------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
WORLD
INCOME
FOCUS
FUND
<S> <C>
- ----------------------------------------------------------
Appreciated securities.......................................... $ 175,154
Depreciated securities.......................................... (5,135,915)
------------
Net unrealized depreciation..................................... $ (4,960,761)
------------
------------
Cost for Federal income tax purposes*........................... $ 78,516,982
------------
------------
- ----------------------------------------------------------
</TABLE>
* Net of premiums received on options written.
At December 31, 1994, net realized and unrealized gains (losses) were as
follows:
- ----------------------------------------------------------
<TABLE>
<CAPTION>
AMERICAN BASIC VALUE
BALANCED FUND FOCUS FUND
-------------------------- ---------------------------
Realized Realized
Gains Unrealized Gains Unrealized
(Losses) Losses (Losses) Losses
<S> <C> <C> <C> <C>
- ----------------------------------------------------------
Long-term investments.... $ (635,513) $ (6,181,639) $ 7,037,866 $ (4,723,949)
Short-term investments... 1,291 -- (155) --
Foreign currency
transactions............. -- -- -- --
----------- ------------ ------------ ------------
$ (634,222) $ (6,181,639) $ 7,037,711 $ (4,723,949)
----------- ------------ ------------ ------------
----------- ------------ ------------ ------------
- ----------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
DEVELOPING CAPITAL DOMESTIC MONEY
MARKETS FUND MARKET FUND
-------------------------- ---------------------------
Realized Unrealized
Gains Gains Realized Unrealized
(Losses) (Losses) Gains Losses
<S> <C> <C> <C> <C>
- ----------------------------------------------------------
Long-term investments.... $ (673,658) $ (2,334,256) -- --
Short-term investments... (38) (11,293) $ 5,347 $ (196,315)
Foreign currency
transactions............. 1,440 372 -- --
----------- ------------ ------------ ------------
$ (672,256) $ (2,345,177) $ 5,347 $ (196,315)
----------- ------------ ------------ ------------
----------- ------------ ------------ ------------
- ----------------------------------------------------------
<CAPTION>
EQUITY GROWTH FLEXIBLE STRATEGY
FUND FUND
-------------------------- ---------------------------
Realized Realized
Gains Unrealized Gains Unrealized
(Losses) Gains (Losses) Gains
<S> <C> <C> <C> <C>
- ----------------------------------------------------------
Long-term investments.... $(1,981,831) $ 2,644,128 $ 5,023,198 $ 749,329
Short-term investments... 68 -- (28) --
Investment options
written.................. -- -- 392 2,528
Foreign currency
transactions............. -- -- (278,822) 6,550
----------- ------------ ------------ ------------
$(1,981,763) $ 2,644,128 $ 4,744,740 $ 758,407
----------- ------------ ------------ ------------
----------- ------------ ------------ ------------
- ----------------------------------------------------------
</TABLE>
132
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GLOBAL STRATEGY GLOBAL UTILITY
FOCUS FUND FOCUS FUND
-------------------------- ---------------------------
Realized Unrealized Realized Unrealized
Gains Gains Gains Gains
(Losses) (Losses) (Losses) (Losses)
<S> <C> <C> <C> <C>
- ----------------------------------------------------------
Long-term investments.... $ 146,995 $(12,228,236) $ (1,489,424) $(11,683,260)
Short-term investments... (2,338) -- (757) --
Foreign currency
transactions............. (370,007) (9,697) 8,194 138
Forward foreign exchange
contracts................ 22,390 559,659 -- --
----------- ------------ ------------ ------------
$ (202,960) $(11,678,274) $ (1,481,987) $(11,683,122)
----------- ------------ ------------ ------------
----------- ------------ ------------ ------------
- ----------------------------------------------------------
<CAPTION>
HIGH CURRENT INTERMEDIATE GOVERNMENT
INCOME FUND BOND FUND
-------------------------- ---------------------------
Realized Unrealized Realized Unrealized
Losses Losses Losses Losses
<S> <C> <C> <C> <C>
- ----------------------------------------------------------
Long-term investments.... $(1,918,271) $(24,346,157) $ (55,070) $ (60,742)
Short-term investments... (233) -- (246) --
----------- ------------ ------------ ------------
$(1,918,504) $(24,346,157) $ (55,316) $ (60,742)
----------- ------------ ------------ ------------
----------- ------------ ------------ ------------
- ----------------------------------------------------------
<CAPTION>
INTERNATIONAL BOND INTERNATIONAL EQUITY
FUND FOCUS FUND
-------------------------- ---------------------------
Realized Unrealized Realized Unrealized
Gains Gains Gains Gains
(Losses) (Losses) (Losses) (Losses)
<S> <C> <C> <C> <C>
- ----------------------------------------------------------
Long-term investments.... $ (41,534) $ (96,468) $ 7,743,365 $ (7,135,363)
Short-term investments... (91) -- (2,798) (267)
Foreign currency
transactions............. 108,688 (387) (108,210) 28,311
Forward foreign exchange
contracts................ (165,754) (66,829) (3,691,954) 300,276
Financial futures
contracts................ -- -- 726,501 710,940
Currency option
written.................. -- -- (133,883) 332,300
Currency option
purchased................ -- -- (644,421) (144,800)
Investment option
purchased................ -- -- (226,045) (350,403)
Investment option
written.................. -- -- 187,662 (36,199)
----------- ------------ ------------ ------------
$ (98,691) $ (163,684) $ 3,850,217 $ (6,295,205)
----------- ------------ ------------ ------------
----------- ------------ ------------ ------------
- ----------------------------------------------------------
<CAPTION>
NATURAL RESOURCES PRIME BOND
FOCUS FUND FUND
-------------------------- ---------------------------
Realized
Gains Unrealized Realized Unrealized
(Losses) Losses Losses Losses
<S> <C> <C> <C> <C>
- ----------------------------------------------------------
Long-term investments.... $ 108,896 $ (873,980) $(18,783,001) $(21,899,527)
Short-term investments... (265) -- (775) --
Foreign currency
transactions............. (6,578) (51) -- --
----------- ------------ ------------ ------------
$ 102,053 $ (874,031) $(18,783,776) $(21,899,527)
----------- ------------ ------------ ------------
----------- ------------ ------------ ------------
- ----------------------------------------------------------
<CAPTION>
QUALITY EQUITY RESERVE ASSETS
FUND FUND
-------------------------- ---------------------------
Realized Unrealized Realized Unrealized
Gains Gains Gains Losses
<S> <C> <C> <C> <C>
- ----------------------------------------------------------
Long-term investments.... $10,328,366 $ 13,206,594 -- --
Short-term investments... -- -- $ 1,901 $ (27,924)
Investment options
written.................. 785 2,880 -- --
Foreign currency
transactions............. 36 -- -- --
----------- ------------ ------------ ------------
$10,329,187 $ 13,209,474 $ 1,901 $ (27,924)
----------- ------------ ------------ ------------
----------- ------------ ------------ ------------
- ----------------------------------------------------------
<CAPTION>
WORLD INCOME
FOCUS FUND
--------------------------
Realized Unrealized
Gains Gains
(Losses) (Losses)
<S> <C> <C> <C> <C>
- ----------------------------------------------------------
Long-term investments.... $(2,735,565) $ (4,617,679)
Short-term investments... (479) --
Currency options
purchased................ -- (3,250)
Currency options
written.................. -- (1,900)
Foreign currency
transactions............. 334,364 7,152
Forward foreign exchange
contracts................ (835,023) (217,104)
----------- ------------
$(3,236,703) $ (4,832,781)
----------- ------------
----------- ------------
- ----------------------------------------------------------
</TABLE>
4. CAPITAL SHARE TRANSACTIONS:
Transactions in capital shares were as follows:
<TABLE>
<S> <C> <C>
AMERICAN BALANCED FUND
- ----------------------------------------------------------
<CAPTION>
For the Year Ended Dollar
December 31, 1994 Shares Amount
<S> <C> <C>
- ----------------------------------------------------------
Shares sold........................................ 4,208,232 $ 56,940,222
Shares issued to shareholders in reinvestment of
dividends and distributions...................... 308,791 4,107,209
------------ ------------
Total issued....................................... 4,517,023 61,047,431
Shares redeemed.................................... (565,599) (7,507,172)
------------ ------------
Net increase....................................... 3,951,424 $ 53,540,259
------------ ------------
------------ ------------
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------
For the Year Ended Dollar
December 31, 1993 Shares Amount
- ----------------------------------------------------------
<S> <C> <C>
Shares sold........................................ 6,659,885 $ 91,353,359
Shares issued to shareholders in reinvestment of
dividends and distributions...................... 92,618 1,203,002
------------ ------------
Total issued....................................... 6,752,503 92,556,361
Shares redeemed.................................... (491,212) (6,703,257)
------------ ------------
Net increase....................................... 6,261,291 $ 85,853,104
------------ ------------
------------ ------------
- ----------------------------------------------------------
</TABLE>
<TABLE>
<S> <C> <C>
BASIC VALUE FOCUS FUND
- ----------------------------------------------------------
<CAPTION>
For the Year Ended Dollar
December 31, 1994 Shares Amount
<S> <C> <C>
- ----------------------------------------------------------
Shares sold........................................ 10,501,448 $115,102,779
Shares issued to shareholders in reinvestment of
dividends........................................ 87,071 928,253
------------ ------------
Total issued....................................... 10,588,519 116,031,032
Shares redeemed.................................... (99,204) (1,078,972)
------------ ------------
Net increase....................................... 10,489,315 $114,952,060
------------ ------------
------------ ------------
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------
For the Period July 1, 1993+ to Dollar
December 31, 1993 Shares Amount
- ----------------------------------------------------------
<S> <C> <C>
Shares sold........................................ 4,116,053 $ 45,688,307
Shares issued to shareholders in reinvestment of
dividends and distributions...................... -- --
------------ ------------
Total issued....................................... 4,116,053 45,688,307
Shares redeemed.................................... (202,978) (2,154,283)
------------ ------------
Net increase....................................... 3,913,075 $ 43,534,024
------------ ------------
------------ ------------
- ----------------------------------------------------------
</TABLE>
+ Prior to July 1, 1993 (commencement of operations), the Fund issued 200,010
shares to MLAM for $2,000,100.
133
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DEVELOPING CAPITAL MARKETS FOCUS FUND
- ----------------------------------------------------------
For the Period May 2, 1994+ to Dollar
December 31, 1994 Shares Amount
<S> <C> <C>
- ----------------------------------------------------------
Shares sold........................................ 3,089,579 $ 31,702,122
Shares issued to shareholders in reinvestment of
dividends and distributions...................... -- --
------------ ------------
Total issued....................................... 3,089,579 31,702,122
Shares redeemed.................................... (33,668) (339,498)
------------ ------------
Net increase....................................... 3,055,911 $ 31,362,624
------------ ------------
------------ ------------
- ----------------------------------------------------------
</TABLE>
+ Prior to May 2, 1994 (commencement of operations), the Fund issued 800,000
shares to MLAM for $8,000,000.
<TABLE>
<CAPTION>
DOMESTIC MONEY MARKET FUND
- ----------------------------------------------------------
For the Year Ended Dollar
December 31, 1994 Shares Amount
<S> <C> <C>
- ----------------------------------------------------------
Shares sold........................................ 458,988,915 $458,988,915
Shares issued to shareholders in reinvestment of
dividends and distributions...................... 11,425,228 11,425,228
------------ ------------
Total issued....................................... 470,414,143 470,414,143
Shares redeemed.................................... (277,547,347) (277,547,347)
------------ ------------
Net increase....................................... 192,866,796 $192,866,796
------------ ------------
------------ ------------
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------
For the Year Ended Dollar
December 31, 1993 Shares Amount
- ----------------------------------------------------------
<S> <C> <C>
Shares sold........................................ 371,125,144 $371,125,144
Shares issued to shareholders in reinvestment of
dividends and distributions...................... 2,796,153 2,796,153
------------ ------------
Total issued....................................... 373,921,297 373,921,297
Shares redeemed.................................... (244,516,209) (244,516,209)
------------ ------------
Net increase....................................... 129,405,088 $129,405,088
------------ ------------
------------ ------------
- ----------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
EQUITY GROWTH FUND
- ----------------------------------------------------------
For the Year Ended Dollar
December 31, 1994 Shares Amount
<S> <C> <C>
- ----------------------------------------------------------
Shares sold........................................ 4,244,767 $ 84,908,525
Shares issued to shareholders in reinvestment of
distributions.................................... 43,323 895,916
------------ ------------
Total issued....................................... 4,288,090 85,804,441
Shares redeemed.................................... (178,315) (3,486,970)
------------ ------------
Net increase....................................... 4,109,775 $ 82,317,471
------------ ------------
------------ ------------
- ----------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
For the Year Ended Dollar
December 31, 1993 Shares Amount
<S> <C> <C>
- ----------------------------------------------------------
Shares sold........................................ 3,715,936 $ 69,928,165
Shares issued to shareholders in reinvestment of
dividends and distributions...................... 330 5,834
------------ ------------
Total issued....................................... 3,716,266 69,933,999
Shares redeemed.................................... (296,830) (5,457,567)
------------ ------------
Net increase....................................... 3,419,436 $ 64,476,432
------------ ------------
------------ ------------
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------
FLEXIBLE STRATEGY FUND
- ----------------------------------------------------------
For the Year Ended Dollar
December 31, 1994 Shares Amount
<S> <C> <C>
- ----------------------------------------------------------
Shares sold........................................ 6,842,583 $103,469,524
Shares issued to shareholders in reinvestment of
dividends and distributions...................... 708,891 10,747,143
------------ ------------
Total issued....................................... 7,551,474 114,216,667
Shares redeemed.................................... (904,823) (13,574,190)
------------ ------------
Net increase....................................... 6,646,651 $100,642,477
------------ ------------
------------ ------------
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------
For the Year Ended Dollar
December 31, 1993 Shares Amount
- ----------------------------------------------------------
<S> <C> <C>
Shares sold........................................ 6,911,886 $103,761,462
Shares issued to shareholders in reinvestment of
dividends and distributions...................... 100,932 1,460,495
------------ ------------
Total issued....................................... 7,012,818 105,221,957
Shares redeemed.................................... (820,921) (12,312,814)
------------ ------------
Net increase....................................... 6,191,897 $ 92,909,143
------------ ------------
------------ ------------
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------
GLOBAL STRATEGY FOCUS FUND
- ----------------------------------------------------------
For the Year Ended Dollar
December 31, 1994 Shares Amount
<S> <C> <C>
- ----------------------------------------------------------
Shares sold........................................ 22,592,355 $274,822,981
Shares issued to shareholders in reinvestment of
dividends and distributions...................... 668,929 8,022,134
------------ ------------
Total issued....................................... 23,261,284 282,845,115
Shares redeemed.................................... (1,462,140) (17,755,958)
------------ ------------
Net increase....................................... 21,799,144 $265,089,157
------------ ------------
------------ ------------
- ----------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------
For the Year Ended Dollar
December 31, 1993 Shares Amount
- ----------------------------------------------------------
<S> <C> <C>
Shares sold........................................ 20,813,811 $241,520,508
Shares issued to shareholders in reinvestment of
dividends and distributions...................... 35,643 394,216
------------ ------------
Total issued....................................... 20,849,454 241,914,724
Shares redeemed.................................... (213,171) (2,402,857)
------------ ------------
Net increase....................................... 20,636,283 $239,511,867
------------ ------------
------------ ------------
- ----------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
GLOBAL UTILITY FOCUS FUND
- ----------------------------------------------------------
For the Year Ended Dollar
December 31, 1994 Shares Amount
<S> <C> <C>
- ----------------------------------------------------------
Shares sold........................................ 4,446,449 $ 45,407,839
Shares issued to shareholders in reinvestment of
dividends and distributions...................... 408,041 3,993,505
------------ ------------
Total issued....................................... 4,854,490 49,401,344
Shares redeemed.................................... (1,299,696) (12,707,196)
------------ ------------
Net increase....................................... 3,554,794 $ 36,694,148
------------ ------------
------------ ------------
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------
For the Period July 1, 1993+ to Dollar
December 31, 1993 Shares Amount
- ----------------------------------------------------------
<S> <C> <C>
Shares sold........................................ 9,794,562 $101,325,529
Shares issued to shareholders in reinvestment of
dividends and distributions...................... 11,422 118,908
------------ ------------
Total issued....................................... 9,805,984 101,444,437
Shares redeemed.................................... (201,232) (2,092,591)
------------ ------------
Net increase....................................... 9,604,752 $ 99,351,846
------------ ------------
------------ ------------
- ----------------------------------------------------------
</TABLE>
+ Prior to July 1, 1993 (commencement of operations), the Fund issued 200,010
shares to MLAM for $2,000,000.
<TABLE>
<CAPTION>
HIGH CURRENT INCOME FUND
- ----------------------------------------------------------
For the Year Ended Dollar
December 31, 1994 Shares Amount
<S> <C> <C>
- ----------------------------------------------------------
Shares sold........................................ 10,081,695 $116,511,262
Shares issued to shareholders in reinvestment of
dividends and distributions...................... 1,840,902 20,563,966
------------ ------------
Total issued....................................... 11,922,597 137,075,228
Shares redeemed.................................... (1,381,220) (15,761,890)
------------ ------------
Net increase....................................... 10,541,377 $121,313,338
------------ ------------
------------ ------------
</TABLE>
134
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ----------------------------------------------------------
For the Year Ended Dollar
December 31, 1993 Shares Amount
- ----------------------------------------------------------
<S> <C> <C>
Shares sold........................................ 11,096,856 $130,007,224
Shares issued to shareholders in reinvestment of
dividends........................................ 517,507 6,035,740
------------ ------------
Total issued....................................... 11,614,363 136,042,964
Shares redeemed.................................... (424,381) (4,968,409)
------------ ------------
Net increase....................................... 11,189,982 $131,074,555
------------ ------------
------------ ------------
- ----------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
INTERMEDIATE GOVERNMENT BOND FUND
- ----------------------------------------------------------
For the Period May 2, 1994+ to Dollar
December 31, 1994 Shares Amount
<S> <C> <C>
- ----------------------------------------------------------
Shares sold........................................ 1,580,746 $ 15,798,020
Shares issued to shareholders in reinvestment of
dividends........................................ 22,294 222,052
------------ ------------
Total issued....................................... 1,603,040 16,020,072
Shares redeemed.................................... (16,719) (166,738)
------------ ------------
Net increase....................................... 1,586,321 $ 15,853,334
------------ ------------
------------ ------------
- ----------------------------------------------------------
</TABLE>
+ Prior to May 2, 1994 (commencement of operations), the Fund issued 200,000
shares to MLAM for $2,000,000.
<TABLE>
<CAPTION>
INTERNATIONAL BOND FUND
- ----------------------------------------------------------
For the Period May 2, 1994+ to Dollar
December 31, 1994 Shares Amount
<S> <C> <C>
- ----------------------------------------------------------
Shares sold........................................ 532,215 $ 5,218,763
Shares issued to shareholders in reinvestment of
dividends........................................ 27,759 271,353
------------ ------------
Total issued....................................... 559,974 5,490,116
Shares redeemed.................................... (35,652) (348,847)
------------ ------------
Net increase....................................... 524,322 $ 5,141,269
------------ ------------
------------ ------------
- ----------------------------------------------------------
</TABLE>
+ Prior to May 2, 1994 (commencement of operations), the Fund issued 500,000
shares to MLAM for $5,000,000.
<TABLE>
<CAPTION>
INTERNATIONAL EQUITY FOCUS FUND
- ----------------------------------------------------------
For the Year Ended Dollar
December 31, 1994 Shares Amount
<S> <C> <C>
- ----------------------------------------------------------
Shares sold........................................ 15,762,751 $177,512,550
Shares issued to shareholders in reinvestment of
dividends and distributions...................... 155,170 1,705,946
------------ ------------
Total issued....................................... 15,917,921 179,218,496
Shares redeemed.................................... (149,766) (1,678,473)
------------ ------------
Net increase....................................... 15,768,155 $177,540,023
------------ ------------
------------ ------------
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------
For the Period July 1, 1993+ to Dollar
December 31, 1993 Shares Amount
- ----------------------------------------------------------
<S> <C> <C>
Shares sold........................................ 6,976,839 $ 72,732,083
Shares issued to shareholders in reinvestment of
dividends and distributions...................... -- --
------------ ------------
Total issued....................................... 6,976,839 72,732,083
Shares redeemed.................................... (804,344) (8,379,435)
------------ ------------
Net increase....................................... 6,172,495 $ 64,352,648
------------ ------------
------------ ------------
- ----------------------------------------------------------
</TABLE>
+ Prior to July 1, 1993 (commencement of operations), the Fund issued 800,010
shares to MLAM for $8,000,100.
<TABLE>
<CAPTION>
NATURAL RESOURCES FOCUS FUND
- ----------------------------------------------------------
For the Year Ended Dollar
December 31, 1994 Shares Amount
<S> <C> <C>
- ----------------------------------------------------------
Shares sold........................................ 2,431,502 $ 26,836,585
Shares issued to shareholders in reinvestment of
dividends........................................ 7,751 83,948
------------ ------------
Total issued....................................... 2,439,253 26,920,533
Shares redeemed.................................... (134,053) (1,481,555)
------------ ------------
Net increase....................................... 2,305,200 $ 25,438,978
------------ ------------
------------ ------------
- ----------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------
For the Year Ended Dollar
December 31, 1993 Shares Amount
- ----------------------------------------------------------
<S> <C> <C>
Shares sold........................................ 1,268,742 $ 14,115,826
Shares issued to shareholders in reinvestment of
dividends........................................ 3,674 40,449
------------ ------------
Total issued....................................... 1,272,416 14,156,275
Shares redeemed.................................... (327,587) (3,584,398)
------------ ------------
Net increase....................................... 944,829 $ 10,571,877
------------ ------------
------------ ------------
</TABLE>
<TABLE>
<S> <C> <C>
- ----------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PRIME BOND FUND
- ----------------------------------------------------------
For the Year Ended Dollar
December 31, 1994 Shares Amount
<S> <C> <C>
- ----------------------------------------------------------
Shares sold........................................ 9,962,468 $118,092,307
Shares issued to shareholders in reinvestment of
dividends and distributions...................... 2,421,862 28,191,568
------------ ------------
Total issued....................................... 12,384,330 146,283,875
Shares redeemed.................................... (2,052,800) (23,633,675)
------------ ------------
Net increase....................................... 10,331,530 $122,650,200
------------ ------------
------------ ------------
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------
For the Year Ended Dollar
December 31, 1993 Shares Amount
- ----------------------------------------------------------
<S> <C> <C>
Shares sold........................................ 18,166,471 $229,284,947
Shares issued to shareholders in reinvestment of
dividends and distributions...................... 835,307 10,463,170
------------ ------------
Total issued....................................... 19,001,778 239,748,117
Shares redeemed.................................... (1,205,821) (15,218,080)
------------ ------------
Net increase....................................... 17,795,957 $224,530,037
------------ ------------
------------ ------------
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------
QUALITY EQUITY FUND
- ----------------------------------------------------------
For the Year Ended Dollar
December 31, 1994 Shares Amount
<S> <C> <C>
- ----------------------------------------------------------
Shares sold........................................ 6,335,594 $177,474,655
Shares issued to shareholders in reinvestment of
dividends and distributions...................... 218,564 6,013,863
------------ ------------
Total issued....................................... 6,554,158 183,488,518
Shares redeemed.................................... (476,786) (13,262,021)
------------ ------------
Net increase....................................... 6,077,372 $170,226,497
------------ ------------
------------ ------------
- ----------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------
For the Year Ended Dollar
December 31, 1993 Shares Amount
- ----------------------------------------------------------
<S> <C> <C>
Shares sold........................................ 7,584,386 $204,488,643
Shares issued to shareholders in reinvestment of
dividends and distributions...................... 38,501 99,487
------------ ------------
Total issued....................................... 7,622,887 204,588,130
Shares redeemed.................................... (412,554) (11,039,403)
------------ ------------
Net increase....................................... 7,210,333 $193,548,727
------------ ------------
------------ ------------
- ----------------------------------------------------------
</TABLE>
135
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
RESERVE ASSETS FUND
- ----------------------------------------------------------
For the Year Ended Dollar
December 31, 1994 Shares Amount
<S> <C> <C>
- ----------------------------------------------------------
Shares sold........................................ 19,180,364 $ 19,180,364
Shares issued to shareholders in reinvestment of
dividends and distributions...................... 1,250,777 1,250,777
------------ ------------
Total issued....................................... 20,431,141 20,431,141
Shares redeemed.................................... (18,368,014) (18,368,014)
------------ ------------
Net increase....................................... 2,063,127 $ 2,063,127
------------ ------------
------------ ------------
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------
For the Year Ended Dollar
December 31, 1993 Shares Amount
- ----------------------------------------------------------
<S> <C> <C>
Shares sold........................................ 18,903,263 $ 18,903,263
Shares issued to shareholders in reinvestment of
dividends and distributions...................... 772,770 772,770
------------ ------------
Total issued....................................... 19,676,033 19,676,033
Shares redeemed.................................... (16,275,313) (16,275,313)
------------ ------------
Net increase....................................... 3,400,720 $ 3,400,720
------------ ------------
------------ ------------
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------
WORLD INCOME FOCUS FUND
- ----------------------------------------------------------
For the Year Ended Dollar
December 31, 1994 Shares Amount
<S> <C> <C>
- ----------------------------------------------------------
Shares sold........................................ 3,613,258 $ 35,765,361
Shares issued to shareholders in reinvestment of
dividends and distributions...................... 565,499 5,699,784
------------ ------------
Total issued....................................... 4,178,757 41,465,145
Shares redeemed.................................... (870,578) (8,296,766)
------------ ------------
Net increase....................................... 3,308,179 $ 33,168,379
------------ ------------
------------ ------------
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------
For the Period July 1, 1993+ to Dollar
December 31, 1993 Shares Amount
- ----------------------------------------------------------
<S> <C> <C>
Shares sold........................................ 4,880,334 $ 49,656,106
Shares issued to shareholders in reinvestment of
dividends........................................ 63,693 647,784
------------ ------------
Total issued....................................... 4,944,027 50,303,890
Shares redeemed.................................... (855,476) (8,720,702)
------------ ------------
Net increase....................................... 4,088,551 $ 41,583,188
------------ ------------
------------ ------------
- ----------------------------------------------------------
</TABLE>
+ Prior to July 1,1993 (commencement of operations), the Fund issued 800,010
shares to MLAM for $8,000,100.
5. CAPITAL LOSS CARRYFORWARD:
At December 31, 1994, the Company had capital loss carryforwards of
approximately $634,000 in the American Balanced Fund, all of which expires in
2002; $91,000 in the Developing Capital Markets Focus Fund, all of which expires
in 2002; $1,982,000 in the Equity Growth Fund, all of which expires in 2002;
$1,462,000 in the Global Utility Focus Fund, all of which expires in 2002;
$420,000 in the High Current Income Fund, of which $119,000 expires in 1999 and
$301,000 expires in 2002; $5,000 in the Intermediate Government Bond Fund, all
of which expires in 2002; $27,000 in the International Bond Fund, all of which
expires in 2002; $15,024,000 in the Prime Bond Fund, all of which expires in
2002; and $2,008,000 in the World Income Focus Fund, all of which expires in
2002.
6. LOANED SECURITIES:
At December 31, 1994, the Prime Bond Fund held US Treasury bonds having an
aggregate value of approximately $23,421,000 as collateral for portfolio
securities loaned having a market value of approximately $22,983,000.
7. COMMITMENTS:
At December 31, 1994, the International Equity Focus Fund and World Income Focus
Fund had entered into foreign exchange contracts under which they agreed to sell
various foreign currencies with values of approximately $354,000 and $9,000,
respectively, and Global Strategy Focus Fund, International Equity Focus Fund
and Natural Resources Focus Fund had entered into foreign exchange contracts
under which it agreed to purchase various foreign currencies with values of
approximately $110,000, $253,000 and $222,000, respectively.
8. SUBSEQUENT EVENT:
On January 3, 1995, the Board of Directors declared ordinary income dividends
and long-term capital gains distributions per share payable on January 10, 1995
to shareholders of record as of December 31, 1994 as follows:
<TABLE>
<CAPTION>
- ----------------------------------------------------------
LONG-TERM
ORDINARY CAPITAL
FUND INCOME-NET GAINS
- ----------------------------------------------------------
<S> <C> <C>
American Balanced Fund........................... $ 0.271394 --
Basic Value Focus Fund........................... 0.570135 $0.015911
Developing Capital Markets Focus Fund............ 0.086102 --
Domestic Money Market Fund....................... -- --
Equity Growth Fund............................... 0.043408 --
Flexible Strategy Fund........................... 0.189923 0.270745
Global Strategy Focus Fund....................... 0.174053 0.004539
Global Utility Focus Fund........................ 0.102569 --
High Current Income Fund......................... -- --
Intermediate Government Bond Fund................ -- --
International Bond Fund.......................... -- --
International Equity Focus Fund.................. 0.330050 0.080300
Natural Resources Focus Fund..................... 0.077104 0.031612
Prime Bond Fund.................................. -- --
Quality Equity Fund.............................. 0.281519 0.512323
Reserve Assets Fund.............................. -- --
World Income Focus Fund.......................... -- --
</TABLE>
136
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
MERRILL LYNCH VARIABLE SERIES FUNDS, INC.
INDEPENDENT AUDITORS' REPORT
- ---------------------------------------------------------
THE BOARD OF DIRECTORS AND SHAREHOLDERS,
MERRILL LYNCH VARIABLE SERIES FUNDS, INC.:
We have audited the accompanying statements of assets and liabilities, including
the schedules of investments, of American Balanced, Basic Value Focus,
Developing Capital Markets Focus, Domestic Money Market, Equity Growth, Flexible
Strategy, Global Strategy Focus, Global Utility Focus, High Current Income,
Intermediate Government Bond, International Bond, International Equity Focus,
Natural Resources Focus, Prime Bond, Quality Equity, Reserve Assets, and World
Income Focus Funds of Merrill Lynch Variable Series Funds, Inc. as of December
31, 1994, the related statements of operations for the period then ended and
changes in net assets for each of the periods 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 Funds'
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 procedure included confirmation of securities owned at December
31, 1994, by correspondence with the custodians 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 American Balanced,
Basic Value Focus, Developing Capital Markets Focus, Domestic Money Market,
Equity Growth, Flexible Strategy, Global Strategy Focus, Global Utility Focus,
High Current Income, Intermediate Government Bond, International Bond,
International Equity Focus, Natural Resources Focus, Prime Bond, Quality Equity,
Reserve Assets, and World Income Focus Funds of Merrill Lynch Variable Series
Funds, Inc. as of December 31, 1994, 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 LLP
Princeton, New Jersey
February 17, 1995
137
<PAGE>
<PAGE>
- ----------------------------------------------------------
MERRILL LYNCH
VARIABLE SERIES FUNDS, INC.
- ----------------------------------------------------------
PRINCIPAL OFFICE OF THE FUNDS
Box 9011
Princeton, NJ 08543-9011
DISTRIBUTOR
Merrill Lynch Funds Distributor, Inc.
CUSTODIAN
For all Funds except Developing Capital
Markets Focus Fund:
The Bank of New York
90 Washington Street
New York, NY 10286
For Developing Capital Markets Focus Fund:
Chase Manhattan Bank
Chase Metro Tech Center
Brooklyn, NY 11245
TRANSFER AGENT
Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, FL 32246-6484
(800) 637-3863
DIRECTORS AND OFFICERS
Arthur Zeikel Adrian Holmes
President Vice President
Joe Grills Vincent T. Lathbury III
Director Vice President
Walter Mintz Peter Lehman
Director Vice President
Melvin R. Seiden Fredric Lutcher
Director Vice President
Stephen B. Swensrud Jay C. Harbeck
Director Vice President
Harry Woolf Robert Parish
Director Vice President
Terry K. Glenn Grace Pineda
Executive Vice President Vice President
Bernard J. Durnin Kevin Rendino
Senior Vice President Vice President
N. John Hewitt Walter Rogers
Senior Vice President Vice President
Christopher G. Ayoub Aldona A. Schwartz
Vice President Vice President
Andrew Bascand Stephen Silverman
Vice President Vice President
Donald C. Burke Gerald M. Richard
Vice President
Treasurer
Denis B. Cummings Michael J. Hennewinkel
Vice President
Secretary
Joel Heymsfeld
Vice President
138
<PAGE>
<PAGE>
