MERRILL LYNCH
HEALTHCARE
FUND, INC.
FUND LOGO
Semi-Annual Report
October 31, 1995
This report is not authorized for use as an offer of sale or
a solicitation of an offer to buy shares of the Company un-
less accompanied or preceded by the Company's current
prospectus. Past performance results shown in this re-
port should not be considered a representation of future
performance. Investment return and principal value of
shares will fluctuate so that shares, when redeemed, may
be worth more or less than their original cost.
<PAGE>
Merrill Lynch
Healthcare Fund, Inc.
Box 9011
Princeton, NJ
08543-9011
MERRILL LYNCH HEALTHCARE FUND, INC.
Worldwide
Investments
As of 10/31/95
Percent Breakdown of Percent of
Securities by Country Net Assets
United States 60.5%
Switzerland 14.9
Sweden 6.6
Ireland 5.1
Denmark 2.4
United Kingdom 2.3
Canada 0.7
Israel 0.4
Japan 0.3
Industries Represented Percent of
In the Portfolio Net Assets
Pharmaceutical--Prescription 23.2%
Medical Specialties 19.3
Pharmaceutical--Diversified 16.5
Pharmaceutical--Consumer 13.9
Health Care Cost Containment 11.1
Diagnostics 5.4
Biotechnology 3.8
<PAGE>
Ten Largest Holdings Percent of
Represented in the Portfolio Net Assets
Ciba-Geigy AG (Registered) 5.4%
Elan Corporation PLC (ADR) 5.1
Roche Holdings AG 4.8
Sandoz AG (Registered) 4.7
Pharmacia AB (Class B) 4.1
Merck & Co., Inc. 4.1
Medtronic, Inc. 3.5
EP Technologies, Inc. 3.5
Pfizer, Inc. 3.0
American Home Products Corporation 2.5
DEAR SHAREHOLDER
During the October quarter, the invest-
ment climate for the healthcare sector
continued to be highly favorable. We
believe the outlook is especially
positive in the United States. Both
inflation and interest rates are low,
and the lack of sustained US dollar
strength has favored US-based
pharmaceutical companies and other
healthcare companies with operations
outside of the United States. Further-
more, the regulatory review process in
the United States has been stream-
lined, and new drugs are being approved
more rapidly. In our judgment, this
regulatory change, helped by user fees
paid by healthcare companies, saves
the companies development costs and
should accelerate the timing of rev-
enue gains from new products. Reflect-
ing these positive developments, share
prices for US pharmaceutical and
medical device companies advanced
strongly during the October quarter.
<PAGE>
Healthcare service companies, pri-
marily health maintenance organi-
zations (HMOs), performed more in
line with the general stock market.
Enrollment growth is strong. However,
there is concern that profit margins
will be pressured by intense competi-
tion and by increased enrollment of
Medicare patients who are older and
may require more medical care. More-
over, as the Republican healthcare
proposal--which encourages HMO
membership and involves a sizeable
cut in the Medicare program--moves
toward an expected Presidential veto,
the outlook for healthcare service
companies becomes less certain.
However, we expect a subsequent
healthcare measure to gain Presi-
dential as well as Congressional
support and to sustain the strong
impetus toward managed healthcare
(that is, HMOs).
Earnings were robust for healthcare
companies outside of the United
States, although negatively impacted
by the continued US dollar weakness
as earnings from US-based operations
were translated back into local curren-
cies. As a result, earnings for non-US
multinational healthcare companies
lagged those of their US-based coun-
terparts. There are various govern-
ment healthcare cost-containment
programs already in place in Europe
and Japan. However, the aging of the
population throughout the developed
world presents budget challenges
that may necessitate a variety of
changes in government-supported
healthcare programs. Price reduc-
tions for less-essential drugs are one
likely change in several countries.
This should not impact the multi-
national companies that tend to
market more sophisticated pharma-
ceuticals that treat more serious
illnesses.
<PAGE>
Portfolio Matters
At the end of the October quarter,
almost half of Merrill Lynch Health-
care Fund, Inc.'s assets was invested
in pharmaceutical companies. Our
pharmaceutical investments were
almost evenly divided between US
and non-US companies. Share price
valuations for foreign-based multi-
nationals are currently very
compelling.
The Fund also continued to have
significant exposure to the medical
device industry through investments
in companies such as Medtronic, Inc.,
Boston Scientific Corp. and Saint
Jude Medical, Inc. These companies
have made major advances in the
cardiovascular, urological, and
cerebro-vascular areas, which are
expected to extend and improve the
quality of life for many patients.
During the October quarter, we initi-
ated a position in VISX, Inc., a leader
in the field of corneal sculpting. This
is a patented and proprietary laser
treatment that may enable many
near-sighted people to regain almost-
perfect vision and discard their eye-
glasses. VISX is presently awaiting
Federal Drug Administration approval
for its corneal sculpting procedure.
The market potential of this pro-
cedure is very large. Moreover, under
an agreement with its only com-
petitor company in the US market,
VISX will receive a share of the fee
each time the competitor's procedure
is performed.
Another new investment is Pacificare
Health Systems, Inc., one of the
largest HMO groups in the United
States. Pacificare has successfully
weathered an intense competitive
climate in southern California. The
company is highly experienced in
dealing with Medicare programs, the
source of two-thirds of its revenues.
We view Pacificare as especially
well-positioned to benefit from the
HMO enrollment surge that we think
is likely to result from the restructur-
ing of Medicare/Medicaid programs.
<PAGE>
In Conclusion
It is possible that new legislation will
be enacted in 1996 that will alter
the Federal healthcare programs. If
passed, the new laws as now proposed
will present challenges as well as
opportunities for healthcare com-
panies and Merrill Lynch Healthcare
Fund, Inc. We believe that our port-
folio is well-positioned to manage
these challenges and take advantage
of the opportunities that will be
created by the current proposals. We
remain alert to the possible need to
adjust the portfolio to meet potential
changes in the proposals.
We thank you for your continued
investment in Merrill Lynch Health-
care Fund, Inc., and we look forward
to reviewing our outlook and strategy
with you again in our next report to
shareholders.
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
(Jordan C. Screiber)
Jordan C. Schreiber
Vice President and Portfolio Manager
November 28, 1995
<PAGE>
Officers and
Directors
Arthur Zeikel, President and Director
Donald Cecil, Director
Edward H. Meyer, Director
Charles C. Reilly, Director
Richard R. West, Director
Edward D. Zinbarg, Director
Terry K. Glenn, Executive Vice President
Norman R. Harvey, Senior Vice President
Philip L. Kirstein, Senior Vice President
Donald C. Burke, Vice President
Jordan C. Schreiber, Vice President and Portfolio Manager
Gerald M. Richard, Treasurer
Robert Harris, Secretary
Custodian
The Chase Manhattan Bank, N.A.
Global Securities Services
4 Chase MetroTech Center, 18th Floor
Brooklyn, New York 11245
Transfer Agent
Merrill Lynch Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, Florida 32246-6484
(800) 637-3863
PERFORMANCE DATA
About Fund
Performance
Since October 21, 1994, investors have been able to purchase shares
of the Fund through the Merrill Lynch Select Pricing SM System,
which offers four pricing alternatives:
* Class A Shares incur a maximum initial sales charge (front-end
load) of 5.25% and bear no ongoing distribution or account mainte-
nance fees. Class A Shares are available only to eligible investors.
* Class B Shares are subject to a maximum contingent deferred
sales charge of 4% if redeemed during the first year, decreasing 1%
each year thereafter to 0% after the fourth year. In addition, Class B
Shares are subject to a distribution fee of 0.75% and an account
maintenance fee of 0.25%. These shares automatically convert to
Class D Shares after approximately 8 years.
* Class C Shares are subject to a distribution fee of 0.75% and an
account maintenance fee of 0.25%. In addition, Class C Shares are
subject to a 1% contingent deferred sales charge if redeemed within
one year of purchase.
<PAGE>
* Class D Shares incur a maximum initial sales charge of 5.25%
and an account maintenance fee of 0.25% (but no distribution fee).
Performance data for all of the Fund's shares are presented in the
"Recent Performance Results" and "Performance Summary" tables
on pages 5--7. Data for Class A and Class B Shares are presented in
the "Average Annual Total Return" table below and on page 7. Data
for Class C and Class D Shares are also presented in the "Aggregate
Total Return" table below.
The "Recent Performance Results" table shows investment results
before the deduction of any sales charges for all of the Fund's shares
for the 12-month and 3-month periods ended October 31, 1995.
All data in this table assume imposition of the actual total expenses
incurred by each class of shares during the relevant period.
None of the past results shown should be considered a representation
of future performance. Investment return and principal value of shares
will fluctuate so that shares, when redeemed, may be worth more
or less than their original cost. Dividends paid to each class of shares
will vary because of the different levels of account maintenance,
distribution and transfer agency fees applicable to each class, which
are deducted from the income available to be paid to shareholders.
Average Annual
Total Return+++
% Return Without % Return With
Class A Shares* Sales Charge Sales Charge**
Year Ended 9/30/95 +29.09% +22.31%
2/01/90++ through 9/30/95 +11.18 +10.12
Five Years Ended 9/30/95 +16.55 +15.30
Ten Years Ended 9/30/95 +12.99 +12.38
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
++On February 1, 1990, Merrill Lynch Asset Management became the sole
investment adviser.
<PAGE>
% Return % Return
Class B Shares* Without CDSC With CDSC**
Year Ended 9/30/95 +27.83% +23.83%
2/01/90++ through 9/30/95 +10.05 +10.05
Five Years Ended 9/30/95 +15.38 +15.38
Inception (10/21/88) through 9/30/95 +10.10 +10.10
[FN]
*Maximum contingent deferred sales charge is 4% and is reduced to 0%
after 4 years.
**Assuming payment of applicable contingent deferred sales charge.
++On February 1, 1990, Merrill Lynch Asset Management became the sole
investment adviser.
Aggregate
Total Return
% Return % Return
Class C Shares* Without CDSC With CDSC**
Inception (10/21/94) through 9/30/95 +27.83% +26.83%
[FN]
*Maximum contingent sales charge is 1% and is reduced to 0% after 1 year.
**Assuming payment of applicable contingent deferred sales charge.
% Return Without % Return With
Class D Shares* Sales Charge Sales Charge**
Inception (10/21/94) through 9/30/95 +26.04% +19.42%
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
<TABLE>
Recent
Performance
Results*
<CAPTION>
12 Month 3 Month
10/31/95 7/31/95 10/31/94 % Change % Change
<S> <C> <C> <C> <C> <C>
Class A Shares $4.65 $4.33 $3.62 +28.45% +7.39%
Class B Shares 4.16 3.88 3.27 +27.22 +7.22
Class C Shares 4.16 3.89 3.27 +27.22 +6.94
Class D Shares 4.53 4.22 3.54 +27.97 +7.35
Class A Shares--Total Return +28.45 +7.39
Class B Shares--Total Return +27.22 +7.22
Class C Shares--Total Return +27.22 +6.94
Class D Shares--Total Return +27.97 +7.35
<PAGE>
<FN>
*Investment results shown do not reflect sales charges;
results shown would be lower if a sales charge was included.
</TABLE>
<TABLE>
Performance
Summary--
Class A Shares+++
<CAPTION>
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<C> <C> <C> <C> <C> <C>
4/1/83-12/31/83 $ 9.15 $ 9.56 -- $0.120 + 5.85%
1984 9.56 8.83 $ 0.040 0.090 - 6.34
1985 8.83 10.65 -- 0.120 +22.16
1986 10.65 11.94 0.530 0.100 +17.86
1987 11.94 9.90 3.347 0.015 +10.24
1988 9.90 9.56 0.825 0.145 + 6.39
1989 9.56 9.09 1.422 0.068 +11.46
1990 9.09 7.29 0.832 0.489 - 6.19
1991 7.29 9.18 -- 1.320 +45.71
1992 9.18 4.03 4.123++ 1.028 + 6.92
1993 4.03 3.91 -- 0.013 - 2.63
1994 3.91 3.46 0.266 -- - 4.30
1/1/95-10/31/95 3.46 4.65 -- -- +34.39
------- ------
Total $11.385 Total $3.508
Cumulative total return as of 10/31/95: +241.53%**
<FN>
*Figures may include short-term capital gains distributions.
**Figures assume reinvestment of all dividends and capital
gains distributions at net asset value on the ex-dividend
date, and do not include sales charge; results would be
lower if sales charge was included.
++Figure includes a $0.879 and $3.089 return of capital on
4/22/92 and 4/27/92, respectively.
+++See Important Note on page 7.
</TABLE>
<PAGE>
PERFORMANCE DATA (concluded)
<TABLE>
Performance
Summary--
Class B Shares+++
<CAPTION>
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<C> <C> <C> <C> <C> <C>
10/21/88-12/31/88 $10.24 $9.55 $0.825 $0.089 + 2.22%
1989 9.55 9.07 1.422 0.006 +10.70
1990 9.07 7.19 0.832 0.455 - 7.42
1991 7.19 8.96 -- 1.291 +44.21
1992 8.96 3.72 4.123++ 1.028 + 5.46
1993 3.72 3.59 -- -- - 3.49
1994 3.59 3.13 0.266 -- - 4.99
1/1/95-10/31/95 3.13 4.16 -- -- +32.91
------ ------
Total $7.468 Total $2.869
Cumulative total return as of 10/31/95: +94.15%**
<FN>
*Figures may include short-term capital gains distributions.
**Figures assume reinvestment of all dividends and capital
gains distributions at net asset value on the ex-dividend
date, and do not reflect deduction of any sales charge;
results would be lower if sales charge was deducted.
++Figure includes a $0.879 and $3.089 return of capital on
4/22/92 and 4/27/92, respectively.
</TABLE>
<TABLE>
Performance
Summary--
Class C Shares
<CAPTION>
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<C> <C> <C> <C> <C> <C>
10/21/94-12/31/94 $3.27 $3.13 -- -- - 4.28%
1/1/95-10/31/95 3.13 4.16 -- -- +32.91
Cumulative total return as of 10/31/95: +27.22%**
<PAGE>
<FN>
*Figures may include short-term capital gains distributions.
**Figures assume reinvestment of all dividends and capital
gains distributions at net asset value on the ex-dividend
date, and do not reflect deduction of any sales charge;
results would be lower if sales charge was deducted.
</TABLE>
<TABLE>
Performance
Summary--
Class D Shares
<CAPTION>
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<C> <C> <C> <C> <C> <C>
10/21/94-12/31/94 $3.61 $3.39 -- -- - 6.09%
1/1/95-10/31/95 3.39 4.53 -- -- +33.63
Cumulative total return as of 10/31/95: +25.48%**
<FN>
*Figures may include short-term capital gains distributions.
**Figures assume reinvestment of all dividends and capital gains
distributions at net asset value on the ex-dividend date, and do
not include sales charge; results would be lower if sales
charge was included.
</TABLE>
+++Important Note:
Prior to April 27, 1992, Merrill Lynch Healthcare Fund, Inc.
was known as Sci/Tech Holdings, Inc. and contained, in addition
to a healthcare portfolio, a portfolio of technology securities.
The data on pages 4, 5 and 6 include the performance of the
technology portfolio which is no longer part of the Fund. Set
forth below are performance data which, for the period before
April 27, 1992, includes only the performance of the healthcare
portfolio and a pro rata allocated portion of Sci/Tech
Holdings, Inc.'s cash reserves. On February 1, 1990, Merrill
Lynch Asset Management became the sole investment adviser.
<PAGE>
Average Annual
Total Return
% Return Without % Return With
Class A Shares* Sales Charge Sales Charge**
Year Ended 9/30/95 +29.09% +22.31%
2/01/90++ through 9/30/95 +17.26 +16.15
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
++Due to the inability to completely isolate the performance of Sci/Tech
Holdings, Inc.'s technology portfolio from its healthcare portfolio, computa-
tions are based upon management's estimates of the healthcare portfolio.
% Return % Return
Class B Shares* Without CDSC With CDSC**
Year Ended 9/30/95 +27.83% +23.83%
2/01/90++ through 9/30/95 +16.57 +16.57
[FN]
*Maximum contingent deferred sales charge is 4% and is reduced to 0%
after 4 years.
**Assuming payment of applicable contingent deferred sales charge.
++Due to the inability to completely isolate the performance of Sci/Tech
Holdings, Inc.'s technology portfolio from its healthcare portfolio, computa-
tions are based upon management's estimates of the healthcare portfolio.
<TABLE>
Recent
Performance
Results
<CAPTION>
12 Month 2/01/90 to 10/31/95++
% Change % Change
<S> <C> <C>
Class A Shares--Total Return +28.45% +145.88%
Class B Shares--Total Return +27.22 +137.14
<FN>
++Due to the inability to completely isolate the performance
of Sci/Tech Holdings, Inc.'s technology portfolio from its
healthcare portfolio, computations are based upon management's
estimates of the healthcare portfolio.
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (in US dollars)
<CAPTION>
NORTH Value Percent of
AMERICA Industries Shares Held Investments Cost (Note 1a) Net Assets
<S> <S> <C> <S> <C> <C> <C>
Canada Biotechnology 40,000 ++Biochem Pharma, Inc. $ 1,323,752 $ 1,525,000 0.7%
Total Investments in Canada 1,323,752 1,525,000 0.7
United States Biotechnology 80,000 ++Amgen, Inc. 3,508,752 3,840,000 1.8
80,000 ++Matrix Pharmaceutical Inc. 1,074,375 1,160,000 0.5
165,000 ++PerSeptive Biosystems, Inc. 1,689,375 1,732,500 0.8
------------ ------------ ------
6,272,502 6,732,500 3.1
Diagnostics 100,000 ++Epitope Inc. 1,450,124 1,375,000 0.6
50,000 ++Hologic Inc. 1,325,000 1,293,750 0.6
5,000 ++Lunar Corporation 160,000 181,250 0.1
560,000 ++Meris Laboratories, Inc. 4,722,934 1,015,000 0.5
155,000 ++Metra Biosystems, Inc. 1,989,375 2,828,750 1.3
38,000 ++NeoPath, Inc. 1,040,501 855,000 0.4
207,000 ++Ostex International, Inc. 3,705,937 4,010,625 1.9
------------ ------------ ------
14,393,871 11,559,375 5.4
Health Care Cost 100,000 ++Caremark International, Inc. 2,065,997 2,062,500 1.0
Containment 15,000 Columbia/HCA Healthcare Corporation 599,025 736,875 0.3
50,000 ++FHP International Corporation 1,176,875 1,212,500 0.6
30,000 ++GMIS Inc. 552,222 345,000 0.2
105,000 ++Inphynet Medical Management, Inc. 1,740,826 1,890,000 0.9
150,000 ++Medaphis Corporation 3,439,375 4,725,000 2.2
70,000 ++OrNda Healthcorp. 1,154,875 1,233,750 0.6
25,000 ++Pacific Physician Services, Inc. 423,750 393,750 0.2
10,000 ++Pacificare Health Systems, Inc. (Class A) 600,000 705,000 0.3
51,000 ++Pacificare Health Systems, Inc. (Class B) 3,240,749 3,697,500 1.7
144,750 ++PhyCor Inc. 3,039,750 5,283,375 2.5
70,000 ++Tenet Healthcare Corp. 1,155,700 1,251,250 0.6
------------ ------------ ------
19,189,144 23,536,500 11.1
<PAGE>
Medical Specialties 30,000 Baxter International, Inc. 841,720 1,158,750 0.5
15,000 Becton, Dickinson & Company 772,650 975,000 0.5
100,000 ++Boston Scientific Corp. 2,690,663 4,212,500 2.0
600,000 ++EP Technologies, Inc. 4,317,502 7,425,000 3.5
80,000 ++Fresenius USA Inc. 561,596 1,310,000 0.6
25,000 ++InControl, Inc. 256,250 437,500 0.2
250,000 ++InStent, Inc. 3,534,375 4,187,500 2.0
130,000 Medtronic, Inc. 4,485,863 7,507,500 3.5
30,000 ++Saint Jude Medical, Inc. 1,518,750 1,593,750 0.7
15,000 ++Target Therapeutics, Inc. 1,185,625 1,151,250 0.5
180,000 ++Uromed Corp. 1,916,252 1,912,500 0.9
219,467 ++Uromed Corp.++++ 1,000,005 2,331,837 1.1
105,000 ++VISX, Incorporated 2,441,676 2,362,500 1.1
10,000 ++VIVUS Inc. 205,000 202,500 0.1
50,000 ++Ventritex, Inc. 988,750 975,000 0.5
------------ ------------ ------
26,716,677 37,743,087 17.7
Pharmaceutical-- 100,000 Allergan, Inc. 2,905,227 2,937,500 1.4
Consumer 60,000 American Home Products Corporation 4,337,350 5,317,500 2.5
65,000 Johnson & Johnson Co. 3,885,050 5,297,500 2.5
20,000 Schering-Plough Corp. 639,978 1,072,500 0.5
40,000 Warner-Lambert Co. 3,601,280 3,405,000 1.6
------------ ------------ ------
15,368,885 18,030,000 8.5
Pharmaceutical-- 100,000 Abbott Laboratories 3,346,810 3,975,000 1.9
Diversified 260,000 Collagen Corporation 5,061,254 4,680,000 2.2
140,000 IVAX Corp. 3,815,463 3,185,000 1.5
50,000 ++R.P. Scherer Corporation 1,999,850 2,225,000 1.0
------------ ------------ ------
14,223,377 14,065,000 6.6
Pharmaceutical-- 150,000 Merck & Co., Inc. 5,887,754 8,625,000 4.1
Prescription 110,000 Pfizer, Inc. 4,970,911 6,311,250 3.0
220,000 ++U.S. Bioscience, Inc. 1,100,723 976,250 0.5
20,000 ++The Upjohn Co. 888,700 1,015,000 0.5
------------ ------------ ------
12,848,088 16,927,500 8.1
Investments in the United States 109,012,544 128,593,962 60.5
Total Investments in North America 110,336,296 130,118,962 61.2
MIDDLE
EAST
Israel Pharmaceutical-- 20,000 Teva Pharmaceuticals Industries, Inc.
Diversified (ADR)* 697,500 782,500 0.4
Investments in Israel 697,500 782,500 0.4
Total Investments in the Middle East 697,500 782,500 0.4
<PAGE>
PACIFIC
BASIN
Japan Pharmaceutical-- 30,000 Sankyo Company, Ltd. 709,856 661,765 0.3
Prescription
Investments in Japan 709,856 661,765 0.3
Total Investments in the Pacific Basin 709,856 661,765 0.3
WESTERN
EUROPE
Denmark Pharmaceutical-- 40,000 ++Novo Nordisk A/S (Class B) 4,281,634 5,096,896 2.4
Diversified
Investments in Denmark 4,281,634 5,096,896 2.4
Ireland Pharmaceutical-- 270,000 ++Elan Corporation PLC (ADR)* 9,620,267 10,833,750 5.1
Diversified
Investments in Ireland 9,620,267 10,833,750 5.1
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (in US dollars)
<CAPTION>
WESTERN EUROPE Value Percent of
(concluded) Industries Shares Held Investments Cost (Note 1a) Net Assets
<S> <S> <C> <S> <C> <C> <C>
Sweden Medical Specialties 80,000 Elekta Instrument AB 'B' Free $ 1,571,372 $ 3,316,100 1.6%
Pharmaceutical-- 50,000 Astra AB 'B' Free 1,606,762 1,808,782 0.9
Prescription 250,000 Pharmacia AB (Class B) 5,928,773 8,742,444 4.1
------------ ------------ ------
7,535,535 10,551,226 5.0
Investments in Sweden 9,106,907 13,867,326 6.6
Switzerland Pharmaceutical-- 13,200 Ciba-Geigy AG (Registered) 8,975,560 11,448,385 5.4
Consumer
Pharmaceutical-- 1,400 Roche Holdings AG 8,362,090 10,190,577 4.8
Prescription 12,000 ++Sandoz AG (Registered) 8,706,278 9,920,593 4.7
------------ ------------ ------
17,068,368 20,111,170 9.5
Investments in Switzerland 26,043,928 31,559,555 14.9
<PAGE>
United Kingdom Pharmaceutical-- 80,000 SmithKline Beecham Corp. PLC (ADR)* 3,820,864 4,150,000 2.0
Diversified
Pharmaceutical-- 40,000 Zeneca Group PLC 609,203 745,519 0.3
Prescription
Investments in the United Kingdom 4,430,067 4,895,519 2.3
Total Investments in Western Europe 53,482,803 66,253,046 31.3
SHORT-TERM Face
SECURITIES Amount
Commercial Paper** $ 3,000,000 Ciesco L.P., 5.72% due 11/06/1995 2,997,617 2,997,617 1.4
3,000,000 Daimler-Benz AG, 5.72% due 11/17/1995 2,992,373 2,992,373 1.4
6,547,000 Ford Motor Credit Co., 5.87% due
11/01/1995 6,547,000 6,547,000 3.1
------------ ------------ ------
12,536,990 12,536,990 5.9
Total Investments in Short-Term
Securities 12,536,990 12,536,990 5.9
Total Investments $177,763,445 210,353,263 99.1
============
Other Assets Less Liabilities 1,976,163 0.9
------------ ------
Net Assets $212,329,426 100.0%
============ ======
<FN>
*American Depositary Receipts (ADR).
**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 Company.
++Non-income producing security.
++++Restricted securities as to resale. The value of the Company's
investment in restricted securities was $2,331,837, representing
1.1% of net assets.
<PAGE>
<CAPTION>
Acquisition Value
Issue Date Cost (Note 1a)
<S> <C> <C> <C>
Uromed Corp. 9/15/1993 $1,000,005 $2,331,837
Total $1,000,005 $2,331,837
========== ==========
See Notes to Financial Statements.
</TABLE>
<TABLE>
STATEMENT OF ASSETS AND LIABILITIES
<CAPTION>
As of October 31, 1995
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$177,763,445) (Note 1a) $210,353,263
Cash 653,150
Receivables:
Securities sold $ 1,969,529
Capital shares sold 909,174
Dividends 65,863 2,944,566
-----------
Prepaid registration fees and other assets (Note 1f) 44,321
------------
Total assets 213,995,300
------------
Liabilities: Payables:
Securities purchased 886,875
Capital shares redeemed 238,877
Investment adviser (Note 2) 180,999
Distributor (Note 2) 98,280 1,405,031
------------
Accrued expenses and other liabilities 260,843
------------
Total liabilities 1,665,874
------------
Net Assets: Net assets $212,329,426
============
Net Assets Class A Shares of Common Stock, $0.10 par value, 100,000,000 shares authorized $ 1,909,689
Consist of: Class B Shares of Common Stock, $0.10 par value, 100,000,000 shares authorized 2,617,804
Class C Shares of Common Stock, $0.10 par value, 100,000,000 shares authorized 132,526
Class D Shares of Common Stock, $0.10 par value, 100,000,000 shares authorized 203,333
Paid-in capital in excess of par 163,223,678
Accumulated investment loss--net (843,143)
Undistributed realized capital gains on investments and foreign currency
transactions--net 12,497,047
Unrealized appreciation on investments and foreign currency transactions--net 32,588,492
------------
Net assets $212,329,426
============
<PAGE>
Net Asset Value: Class A--Based on net assets of $88,720,049 and 19,096,895 shares outstanding $ 4.65
============
Class B--Based on net assets of $108,881,168 and 26,178,043 shares outstanding $ 4.16
============
Class C--Based on net assets of $5,514,377 and 1,325,259 shares outstanding $ 4.16
============
Class D--Based on net assets of $9,213,832 and 2,033,327 shares outstanding $ 4.53
============
See Notes to Financial Statements.
</TABLE>
<TABLE>
STATEMENT OF OPERATIONS
<CAPTION>
For the Six Months Ended October 31, 1995
<S> <S> <C> <C>
Investment Dividends (net of $43,182 foreign withholding tax) $ 768,610
Income Interest and discount earned 387,093
(Notes 1d & 1e): ------------
Total income 1,155,703
------------
Expenses: Investment advisory fees (Note 2) $ 900,943
Account maintenance and distribution fees--Class B (Note 2) 451,089
Transfer agent fees--Class B (Note 2) 169,331
Transfer agent fees--Class A (Note 2) 133,278
Printing and shareholder reports 95,290
Accounting services (Note 2) 65,582
Professional fees 46,649
Registration fees (Note 1f) 43,348
Custodian fees 36,310
Account maintenance and distribution fees--Class C (Note 2) 16,219
Transfer agent fees--Class D (Note 2) 10,248
Directors' fees and expenses 10,027
Account maintenance fees--Class D (Note 2) 7,783
Transfer agent fees--Class C (Note 2) 6,458
Pricing fees 62
Other 6,229
------------
Total expenses 1,998,846
------------
Investment loss--net (843,143)
------------
<PAGE>
Realized & Realized gain (loss) from:
Unrealized Investments--net 13,400,651
Gain (Loss) on Foreign currency transactions--net (28,282) 13,372,369
Investments & ------------
Foreign Currency Change in unrealized appreciation/depreciation on:
Transactions--Net Investments--net 21,503,512
(Notes 1b, 1c, Foreign currency transactions--net (16,495) 21,487,017
1e & 3): ------------ ------------
Net realized and unrealized gain on investments and foreign currency transactions 34,859,386
------------
Net Increase in Net Assets Resulting from Operations $ 34,016,243
============
See Notes to Financial Statements.
</TABLE>
<TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
<CAPTION>
For the Six For the
Months Ended Year Ended
October 31, April 30,
Increase (Decrease) in Net Assets: 1955 1995
<S> <S> <C> <C>
Operations: Investment loss--net $ (843,143) $ (1,000,353)
Realized gain (loss) on investments and foreign currency transactions--net 13,372,369 (819,555)
Change in unrealized appreciation/depreciation on investments and foreign
currency transactions--net 21,487,017 9,775,276
------------ ------------
Net increase in net assets resulting from operations 34,016,243 7,955,368
------------ ------------
Distributions to Realized gain on investments--net:
Shareholders Class A -- (4,761,771)
(Note 1g): Class B -- (4,901,206)
------------ ------------
Net decrease in net assets resulting from distributions to shareholders -- (9,662,977)
------------ ------------
Capital Share Net increase in net assets derived from capital share transactions 22,976,113 22,599,545
Transactions ------------ ------------
(Note 4):
Net Assets: Total increase in net assets 56,992,356 20,891,936
Beginning of period 155,337,070 134,445,134
------------ ------------
End of period* $212,329,426 $155,337,070
============ ============
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
FINANCIAL HIGHLIGHTS
<CAPTION>
Class A
For the
For the Eight-
The following per share data and ratios have been For the Six Five-Month For the Month
derived from information provided in the financial Months Period Year Period
statements. Ended Ended Ended Ended
Oct. 31, For the Year Ended April 30, April 30, Nov. 30, Nov. 30,
Increase (Decrease) in Net Asset Value: 1995++ 1995++ 1994++ 1993++ 1992 1991 1990
<S> <S> <C> <C> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 3.81 $ 3.87 $ 3.59 $ 3.63 $ 9.19 $ 7.94 $ 9.13
Operating -------- -------- -------- -------- -------- -------- --------
Performance: Investment income (loss)--net (.01) (.01) (.02) .02 -- .03 .05
Realized and unrealized gain
(loss) on investments and foreign
currency transactions--net .85 .22 .31 (.06) .88 2.08 (.75)
-------- -------- -------- -------- -------- -------- --------
Total from investment operations .84 .21 .29 (.04) .88 2.11 (.70)
-------- -------- -------- -------- -------- -------- --------
Less dividends and distributions:
Return of capital--net -- -- -- -- (3.97) -- --
Investment income--net -- -- (.01) -- -- (.03) (.08)
Realized gain on investments--net -- (.27) -- -- (2.47) (.83) (.41)
-------- -------- -------- -------- -------- -------- --------
Total dividends and distributions -- (.27) (.01) -- (6.44) (.86) (.49)
-------- -------- -------- -------- -------- -------- --------
Net asset value, end of period $ 4.65 $ 3.81 $ 3.87 $ 3.59 $ 3.63 $ 9.19 $ 7.94
======== ======== ======== ======== ======== ======== ========
Total Investment Based on net asset value per share 22.05%+++ 6.47% 8.19% (1.10%) 10.96%+++ 29.44% (8.75%)+++
Return:** ======== ======== ======== ======== ======== ======== ========
Ratios to Average Expenses 1.66%* 1.79% 1.55% 1.85% 1.56%* 1.61% 1.77%*
Net Assets: ======== ======== ======== ======== ======== ======== ========
Investment income (loss)--net (.38%)* (.21%) (.48%) .48% (.16%)* .27% .62%*
======== ======== ======== ======== ======== ======== ========
Supplemental Net assets, end of period
Data: (in thousands) $ 88,720 $ 69,650 $ 70,753 $ 63,528 $ 61,132 $125,979 $114,852
======== ======== ======== ======== ======== ======== ========
Portfolio turnover 72.21% 196.91% 133.58% 103.06% 147.63% 206.29% 159.11%
======== ======== ======== ======== ======== ======== ========
<PAGE>
<CAPTION>
Class B
For the
For the Eight-
The following per share data and ratios have been For the Six Five-Month For the Month
derived from information provided in the financial Months Period Year Period
statements. Ended Ended Ended Ended
Oct. 31, For the Year Ended April 30, April 30, Nov. 30, Nov. 30,
Increase (Decrease) in Net Asset Value: 1995++ 1995++ 1994++ 1993++ 1992++ 1991 1990
<S> <S> <C> <C> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 3.43 $ 3.55 $ 3.31 $ 3.38 $ 9.01 $ 7.84 $ 9.05
Operating -------- -------- -------- -------- -------- -------- --------
Performance: Investment loss--net (.03) (.04) (.05) (.01) (.02) (.03) (.01)
Realized and unrealized gain
(loss) on investments and foreign
currency transactions--net .76 .19 .29 (.06) .83 2.03 (.75)
-------- -------- -------- -------- -------- -------- --------
Total from investment operations .73 .15 .24 (.07) .81 2.00 (.76)
-------- -------- -------- -------- -------- -------- --------
Less dividends and distributions:
Return of capital--net -- -- -- -- (3.97) -- --
Investment income--net -- -- -- -- -- -- (.04)
Realized gain on investments--net -- (.27) -- -- (2.47) (.83) (.41)
-------- -------- -------- -------- -------- -------- --------
Total dividends and distributions -- (.27) -- -- (6.44) (.83) (.45)
-------- -------- -------- -------- -------- -------- --------
Net asset value, end of period $ 4.16 $ 3.43 $ 3.55 $ 3.31 $ 3.38 $ 9.01 $ 7.84
======== ======== ======== ======== ======== ======== ========
Total Investment Based on net asset value per share 21.28%+++ 5.29% 7.25% (2.07%) 10.26%+++ 28.30% (9.37%)+++
Return:** ======== ======== ======== ======== ======== ======== ========
Ratios to Average Expenses, excluding account
Net Assets: maintenance and distribution fees 1.71%* 1.85% 1.56% 1.89% 1.58%* 1.63% 1.82%*
======== ======== ======== ======== ======== ======== ========
Expenses 2.71%* 2.85% 2.56% 2.89% 2.58%* 2.63% 2.82%*
======== ======== ======== ======== ======== ======== ========
Investment loss--net (1.42%)* (1.29%) (1.52%) (.41%) (1.02%)* (.79%) (.36%)*
======== ======== ======== ======== ======== ======== ========
Supplemental Net assets, end of period
Data: (in thousands) $108,881 $ 79,485 $ 63,692 $ 33,071 $ 5,356 $ 6,007 $ 3,222
======== ======== ======== ======== ======== ======== ========
Portfolio turnover 72.21% 196.91% 133.58% 103.06% 147.63% 206.29% 159.11%
======== ======== ======== ======== ======== ======== ========
<PAGE>
<CAPTION>
Class C Class D
For the For the
For the Period For the Period
The following per share data and ratios have been derived Six Months October 21, Six Months October 21,
from information provided in the financial statements. Ended 1994++++ Ended 1994++++
October 31, to April 30, October 31, to April 30,
Increase (Decrease) in Net Asset Value: 1995++ 1995++ 1995++ 1995++
Per Share Net asset value, beginning of period $ 3.43 $ 3.27 $ 3.72 $ 3.61
Operating ---------- ---------- --------- ----------
Performance: Investment loss--net (.03) (.04) (.01) (.02)
Realized and unrealized gain on
investments and foreign currency
transactions--net .76 .20 .82 .13
---------- ---------- --------- ----------
Total from investment operations .73 .16 .81 .11
---------- ---------- --------- ----------
Net asset value, end of period $ 4.16 $ 3.43 $ 4.53 $ 3.72
========== ========== ========= ==========
Total Investment Based on net asset value per share 21.28%+++ 4.89%+++ 21.77%+++ 3.05%+++
Return:** ========== ========== ========= ==========
Ratios to Average Expenses, excluding account maintenance
Net Assets: and distribution fees 1.73%* 2.28%* 1.66%* 2.19%*
========== ========== ========= ==========
Expenses 2.73%* 3.28%* 1.91%* 2.44%*
========== ========== ========= ==========
Investment loss--net (1.60%)* (2.13%)* (.71%)* (1.23%)*
========== ========== ========= ==========
Supplemental Net assets, end of period (in thousands) $ 5,514 $ 1,816 $ 9,214 $ 4,386
Data: ========== ========== ========= ==========
Portfolio turnover 72.21% 196.91% 72.21% 196.91%
========== ========== ========= ==========
<FN>
*Annualized.
**Total investment returns exclude the effect of sales loads.
++Calculation is based on the average number of shares outstanding during the period.
++++Commencement of Operations.
+++Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies:
Merrill Lynch Healthcare Fund, Inc. (the "Company") is registered
under the Investment Company Act of 1940 as a non-diversified,
open-end management investment company. These unaudited
financial statements reflect all adjustments which are, in the
opinion of management, necessary to a fair statement of the results
for the interim period presented. All such adjustments are of a
normal recurring nature. The Company offers four classes of
shares under the Merrill Lynch Select Pricing SM System. Shares of
Class A and Class D are sold with a front-end sales charge. Shares
of Class B and Class C may be subject to a contingent deferred
sales charge. All classes of shares have identical voting, dividend,
liquidation and other rights and the same terms and conditions,
except that Class B, Class C and Class D Shares bear certain
expenses related to the account maintenance of such shares, and
Class B and Class C Shares also bear certain expenses related to
the distribution of such shares. Each class has exclusive voting
rights with respect to matters relating to its account maintenance
and distribution expenditures. The following is a summary of
significant accounting policies followed by the Company.
(a) Valuation of investments--Portfolio securities which are traded
on stock exchanges are valued at the last sale price on the exchange
on which such securities are traded, as of the close of business
on the day the securities are being valued or, lacking any sales,
at the last available bid price. Securities traded in the over-the-
counter market are valued at the last available bid price prior to
the time of valuation. In cases where securities are traded on
more than one exchange, the securities are valued on the exchange
designated by or under the authority of the Board of Directors as
the primary market. Securities which are traded both in the over-
the-counter market and on a stock exchange are valued according
to the broadest and most representative market. Options written
are valued at the last sale price in the case of exchange-traded
options or, in the case of options traded in the over-the-counter
market, the last asked price. Options purchased are valued at the
last sale price in the case of exchange-traded options or, in the case
of options traded in the over-the-counter market, the last bid price.
Short term securities are valued at amortized cost, which approxi-
mates market value. Other investments, including futures contracts
and related options, are stated at market value. Securities and
assets for which market value quotations are not available are valued
at their fair value as determined in good faith by or under the
direction of the Company's Board of Directors.
<PAGE>
(b) 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)
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.
(c) Derivative financial instruments--The Company may engage
in various portfolio strategies to seek to increase its return 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.
* Financial futures contracts--The Company may also purchase or
sell interest rate futures contracts and options on such futures
contracts for the purpose of hedging the market risk on existing
securities or the intended purchase of securities. Futures con-
tracts are contracts for delayed delivery of securities at a specific
future date and at a specific price or yield. Upon entering into a
contract, the Company deposits and maintains as collateral such
initial margin as required by the exchange on which the transac-
tion is effected. Pursuant to the contract, the Company 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 pay-
ments are known as variation margin and are recorded by the
Company as unrealized gains or losses. When the contract is closed,
the Company 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.
*Foreign currency options and futures--The Company 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 Company, sold by the Company but not
yet delivered, or committed or anticipated to be purchased by
the Company.
*Forward foreign exchange contracts--The Company is author-
ized to enter into forward foreign exchange contracts as a hedge
against either specific transactions or portfolio positions. Such
contracts are not entered on the Company's records. However, the
effect on operations is recorded from the date the Company enters
into such contracts. Premium or discount is amortized over the
life of the contracts.
<PAGE>
*Options--The Company is authorized to write covered put and
call options and purchase put options. When the Company writes
an option, an amount equal to the premium received by the
Company is reflected as an asset and an equivalent liability. The
amount of the liability is subsequently marked to market to reflect
the current market value of the option written. When a security
is purchased or sold through an exercise of an option, the related
premium paid (or received) is added to (or deducted from) the
basis of the security acquired or deducted from (or added to) the
proceeds of the security sold. When an option expires (or the
Company enters into a closing transaction), the Company 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 trans-
action exceeds the premium paid or received).
Written and purchased options are non-income producing
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 trans-
actions are recorded on the dates the transactions are entered into
(the trade dates). Dividend income is recorded on the ex-dividend
date, except that if the ex-dividend date has passed, certain divi-
dends from foreign securities are recorded as soon as the Company
is informed of the ex-dividend date. Interest income (including
amortization of discount) is recognized on the accrual basis.
Realized gains and losses on security transactions are determined
on the identified cost basis.
(f) Prepaid registration fees--Prepaid registration fees are charged
to expense as the related shares are issued.
(g) Dividends and distributions--Dividends and distributions paid
by the Company 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 Merrill Lynch & Co., Inc. ("ML & Co."),
which is the limited partner. The Company has also entered into a
Distribution Agreement and Distribution Plans with Merrill Lynch
Funds Distributor, Inc. ("MLFD" or "Distributor"), a wholly-owned
subsidiary of Merrill Lynch Group, Inc.
<PAGE>
MLAM is responsible for the management of the Company's
portfolio and provides, or arranges for affiliates to provide, the
administrative services necessary for the operation of the Company.
As compensation for its services to the Company, MLAM receives
monthly compensation at the annual rate of 1.0% of the average
daily net assets of the Company.
Certain states in which shares of the Company are qualified for
sale impose limitations on the expenses of the Company. The most
restrictive annual expense limitation requires that MLAM reim-
burse the Company to the extent that expenses (excluding inter-
est, taxes, distribution fees, brokerage fees and commissions, and
extraordinary items) exceed 2.5% of the Company's first $30 mil-
lion of average daily net assets, 2.0% of the Company's next $70
million of average daily net assets, and 1.5% of the average daily
net assets in excess thereof. MLAM's obligation to reimburse the
Company is limited to the amount of the investment advisory fee.
No fee payment will be made to MLAM during any fiscal year
which will cause such expenses to exceed the most restrictive
expense limitation at the time of such payment.
Pursuant to the distribution plans (the "Distribution Plans")
adopted by the Company in accordance with Rule 12b-1 under
the Investment Company Act of 1940, the Company pays the
Distributor ongoing account maintenance and distribution fees.
The fees are accrued daily and paid monthly at annual rates based
upon the average daily net assets of the shares as follows:
Account
Maintenance Fee Distribution Fee
Class B 0.25% 0.75%
Class C 0.25% 0.75%
Class D 0.25% --
Pursuant to a sub-agreement with the Distributor, Merrill Lynch,
Pierce, Fenner & Smith Inc. ("MLPF&S"), a subsidiary of ML & Co.,
also provides account maintenance and distribution services to
the Company. The ongoing account maintenance fee compensates
the Distributor and MLPF&S for providing account maintenance
services to Class B, Class C and Class D shareholders. The ongoing
distribution fee compensates the Distributor and MLPF&S for
providing shareholder and distribution-related services to Class B
and Class C shareholders.
<PAGE>
NOTES TO FINANCIAL STATEMENTS (concluded)
For the six months ended October 31, 1995, MLFD earned under-
writing discounts and MLPF&S earned dealer concessions on sales
of the Company's Class A and Class D Shares as follows:
MLFD MLPF&S
Class A $ 589 $ 8,246
Class D $3,351 $43,892
For the six months ended October 31, 1995, MLPF&S received
contingent deferred sales charges of $178,236 and $1,888 relating
to transactions in Class B and Class C Shares, respectively.
In addition, MLPF&S received $63,158 in commissions on the
execution of portfolio security transactions for the Company for
the six months ended October 31, 1995.
Merrill Lynch Financial Data Services, Inc. ("MLFDS"), a wholly-
owned subsidiary of ML & Co., is the Company's transfer agent.
Accounting services are provided to the Company by MLAM at cost.
Certain officers and/or directors of the Company are officers and/or
directors of MLAM, MLPF&S, PSI, MLFDS, MLFD, and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term
securities, for the six months ended October 31, 1995 were
$255,464,208 and $224,601,899, respectively.
Net realized and unrealized gains (losses) as of October 31, 1995
were as follows:
Realized Unrealized
Gains (Losses) Gains (Losses)
Long-term investments $13,400,834 $ 32,589,818
Short-term investments (183) --
Foreign currency transactions (28,282) (1,326)
----------- ------------
Total $13,372,369 $ 32,588,492
=========== ============
<PAGE>
As of October 31, 1995, net unrealized appreciation for Federal
income tax purposes aggregated $32,589,818, of which $38,344,462
related to appreciated securities and $5,754,644 related to
depreciated securities. The aggregate cost of investments at
October 31, 1995 for Federal income tax purposes was $177,763,445.
4. Capital Share Transactions:
Net increase in net assets derived from capital share transactions
was $22,976,113 and $22,599,545 for the six months ended October 31,
1995 and the year ended April 30, 1995, respectively.
Transactions in capital shares for each class were as follows:
Class A Shares for the Six Months Dollar
Ended October 31, 1995 Shares Amount
Shares sold 2,865,166 $ 12,054,125
Shares redeemed (2,037,319) (8,560,668)
------------ ------------
Net increase 827,847 $ 3,493,457
============ ============
Class A Shares for the Year Dollar
Ended April 30, 1995 Shares Amount
Shares sold 5,713,906 $ 20,654,552
Shares issued to shareholders in
reinvestment of distributions 1,236,169 4,042,270
------------ ------------
Total issued 6,950,075 24,696,822
Shares redeemed (6,956,106) (25,023,035)
------------ ------------
Net decrease (6,031) $ (326,213)
============ ============
Class B Shares for the Six Months Dollar
Ended October 31, 1995 Shares Amount
Shares sold 8,051,081 $ 31,557,726
Automatic conversion of shares (117,743) (432,408)
Shares redeemed (4,919,435) (18,426,139)
------------ ------------
Net increase 3,013,903 $ 12,699,179
============ ============
<PAGE>
Class B Shares for the Year Dollar
Ended April 30, 1995 Shares Amount
Shares sold 14,768,466 $ 48,509,782
Shares issued to shareholders in
reinvestment of distributions 1,486,559 4,415,081
------------ ------------
Total issued 16,255,025 52,924,863
Automatic conversion of shares (334,825) (1,098,987)
Shares redeemed (10,719,834) (34,866,393)
------------ ------------
Net increase 5,200,366 $ 16,959,483
============ ============
Class C Shares for the Six Months Dollar
Ended October 31, 1995 Shares Amount
Shares sold 1,089,964 $ 4,233,197
Shares redeemed (293,696) (1,111,828)
------------ ------------
Net increase 796,268 $ 3,121,369
============ ============
Class C Shares for the Period Dollar
Oct. 21, 1994++ to April 30, 1995 Shares Amount
Shares sold 584,554 $ 1,949,867
Shares redeemed (55,563) (184,106)
------------ ------------
Net increase 528,991 $ 1,765,761
============ ============
[FN]
++Commencement of Operations.
Class D Shares for the Six Months Dollar
Ended October 31, 1995 Shares Amount
Shares sold 1,335,061 $ 5,744,341
Automatic conversion of shares 108,424 432,408
Total issued 1,443,485 6,176,749
Shares redeemed (588,203) (2,514,641)
------------ ------------
Net increase 855,282 $ 3,662,108
============ ============
<PAGE>
Class D Shares for the Period Dollar
Oct. 21, 1994++ to April 30, 1995 Shares Amount
Shares sold 1,239,834 $ 4,397,052
Automatic conversion of shares 309,359 1,098,987
------------ ------------
Total issued 1,549,193 5,496,039
Shares redeemed (371,148) (1,295,525)
------------ ------------
Net increase 1,178,045 $ 4,200,514
============ ============
[FN]
++Commencement of Operations.
5. Commitments:
At October 31, 1995, the Company had entered into foreign
exchange contracts under which it had agreed to sell various
foreign currencies with an approximate value of $1,618,000.
6. Capital Loss Carryforward:
At April 30, 1995, the Company had a capital loss carryforward
of approximately $819,000, all of which expires in 2003. This
amount will be available to offset like amounts of any future
taxable gains.
PORTFOLIO CHANGES
For the Quarter Ended October 31, 1995
Additions
*ATS Medical, Inc.
Astra AB 'B' Free
*AutoImmune Inc.
Biochem Pharma, Inc.
Epitope Inc.
FHP International Corporation
GMIS Inc.
*Healthsource, Inc.
Hologic Inc.
InControl, Inc.
<PAGE>
*Interneuron Pharmaceuticals, Inc.
Lunar Corporation
Matrix Pharmaceuticals Inc.
Medaphis Corporation
NeoPath, Inc.
Ostex International, Inc.
Pacificare Health Systems, Inc. (Class A)
Pacificare Health Systems, Inc. (Class B)
PerSeptive Biosystems, Inc.
R.P. Scherer Corporation
Target Therapeutics, Inc.
U.S. Bioscience Inc.
The Upjohn Co.
VISX, Incorporated
VIVUS, Inc.
Ventritex, Inc.
Deletions
AKZO N.V.
*ATS Medical, Inc.
Apria Healthcare Group, Inc.
*AutoImmune Inc.
Bayer AG
Cordis Corp.
Forest Laboratories, Inc.
*Healthsource, Inc.
*Interneuron Pharmaceuticals, Inc.
Lilly (Eli) & Co.
Lincare Holdings, Inc.
Nellcor Inc.
Procter & Gamble Co.
Rhone-Poulenc Rorer, Inc.
[FN]
*Added and deleted in the same quarter.
