MERRILL LYNCH
HEALTHCARE
FUND, INC.
FUND LOGO
Semi-Annual Report
October 31, 1996
This report is not authorized for use as an offer of
sale or a solicitation of an offer to buy shares of the
Company unless accompanied or preceded by the Com-
pany's current prospectus. Past performance results
shown in this report should not be considered a repre-
sentation 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. Statements and other infor-
mation herein are as dated and are subject to change.
<PAGE>
Merrill Lynch
Healthcare Fund, Inc.
Box 9011
Princeton, NJ
08543-9011
Printed on post-consumer recycled paper
MERRILL LYNCH HEALTHCARE FUND, INC.
Worldwide
Investments
As of 10/31/96
Ten Largest Holdings Percent of
Represented in the Portfolio Net Assets
Lilly (Eli) & Co. 5.9%
Warner-Lambert Co. 5.8
Hoechst AG 4.9
SmithKline Beecham Corporation
PLC (ADR) 4.8
Baxter International, Inc. 4.3
American Home Products
Corporation 3.6
Bristol-Myers Squibb Co. 3.6
Johnson & Johnson Co. 3.4
Pfizer, Inc. 3.4
Becton, Dickinson &
Company 3.4
<PAGE>
Breakdown of Percent of
Securities by Country Net Assets
United States 61.1%
Germany 11.9
Switzerland 6.9
United Kingdom 5.9
Japan 5.0
France 3.0
Finland 2.3
Israel 1.1
Sweden 0.6
Denmark 0.1
Industries Represented Percent of
In the Portfolio Net Assets
Pharmaceutical--Diversified 23.0%
Medical Specialties 22.2
Pharmaceutical--Consumer 21.3
Pharmaceutical--Prescription 20.4
Health Care Cost Containment 7.1
Biotechnology 3.2
Diagnostics 0.7
DEAR SHAREHOLDER
During the quarter ended October
31, 1996, investor perceptions as to
the direction of the US economy
shifted from anticipation of an infla-
tionary expansion and sharply
higher interest rates to expectations
of slow growth with low inflation
and interest rates. Accordingly, the
quarter began with a "flight to
quality" within the healthcare sector
following the sharp decline of smaller-
capitalization biotechnology and diag-
nostics companies in July. However,
following their substantial rise, share
prices of large-capitalization pharma-
ceutical companies came under
pressure by October quarter-end as
investors became concerned about the
possibility of a landslide Democratic
victory encouraging the Clinton Admin-
istration to seek passage of comprehen-
sive healthcare reform legislation.
<PAGE>
Despite these shifting trends, Merrill
Lynch Healthcare Fund, Inc. experi-
enced strong performance for the
three months ended October 31, 1996.
The Fund's total returns for the
quarter were +11.69%, +11.32%,
+11.32% and +11.59%, respectively,
for Class A, Class B, Class C and
Class D Shares. (Results shown do not
reflect sales charges and would be
lower if sales charges were included.
Complete performance information,
including average annual total
returns, can be found on pages 4-7 of
this report to shareholders.)
Portfolio Matters
We continue to believe that proponents
of comprehensive healthcare reform in
the United States will be unsuccessful
on the legislative front. In view of the
Republican Party's continued control of
Congress, we view any impetus to con-
sider comprehensive healthcare legisla-
tion as highly unlikely. We believe that
any healthcare legislation passed will
be incremental and not comprehensive.
The most likely political targets will be
providers of specialist services that
have heretofore been reimbursed by
government programs, such as respir-
atory therapy contractors. However, the
Medicare Trust Fund is now projected to
run out of funds in 2001. Both political
parties agree that a bipartisan panel
must be appointed to find a solution.
We believe that it is likely that a resolu-
tion to the Medicare crisis will come
during the first year of the Clinton
Administration's second term.
Given our expectations of a continued
slow-growth economy with low interest
rates, we continue to emphasize large-
capitalization pharmaceutical stocks
in the Fund's portfolio. Fundamental
factors remain strong for these com-
panies with unit growth rising. We
believe that more investors will come to
recognize that prescription drugs can
lower healthcare costs by preventing
costly hospitalization.
<PAGE>
We added two new US pharmaceutical
stocks to the portfolio during the
October quarter: Bristol-Myers Squibb
Co. and Schering-Plough Corp. Bristol-
Myers Squibb has several important
new drugs, such as cholesterol-lowering
Pravachol. Sales should be supported
by a study that the company sponsored
in the United Kingdom which demon-
strated for the first time that cholesterol
reduction is a life-saving therapy. Two
other important new products for the
company are the cancer therapy, Taxol,
and Glucophage, which treats diabetes.
Schering-Plough discovered Claritin,
which is now the leading anti-allergy
medicine.
The Fund's two largest holdings, Warner-
Lambert Co. and Eli Lilly & Co., are
also likely to benefit from important
new pharmaceuticals. Warner-Lambert
Co. has a new drug to treat diabetes,
Noscal, which should enable insulin to
be utilized more effectively. Warner-
Lambert Co. entered into a joint venture
with Sankyo Company, Limited to
co-promote Noscal in the United States.
Sankyo Company, Limited, the second-
largest Japanese pharmaceutical
company and a Fund holding, dis-
covered Noscal. Food and Drug
Administration (FDA) approval is
expected early in 1997. Eli Lilly & Co.
recently received FDA approval for
Zyprexa, a new drug to treat schizo-
phrenia. We have high expectations for
the acceptance of Zyprexa.
In Conclusion
With the relatively high valuations for
healthcare stocks in the United States,
over one-third of the portfolio
continues to be invested in non-US
companies. We believe that this strategy,
combined with our focus on large-
capitalization pharmaceutical stocks in
the United States, is an appropriate
strategy for this time.
<PAGE>
We thank you for your investment in
Merrill Lynch Healthcare 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. Schreiber)
Jordan C. Schreiber
Vice President and Portfolio Manager
December 3, 1996
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
<PAGE>
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
Investors are 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 maintenance fees. Class A Shares are available
only to eligible investors.
* Class B Shares are subject to a maximum contingent
deferred sales charge of 4% if redeemed during the first year,
decreasing 1% each year thereafter to 0% after the fourth
year. In addition, Class B Shares are subject to a distribution
fee of 0.75% and an account maintenance fee of 0.25%.
These shares automatically convert to Class D Shares after
approximately 8 years. (There is no initial sales charge
for automatic share conversions.)
* Class C Shares are subject to a distribution fee of 0.75%
and an account maintenance fee of 0.25%. In addition,
Class C Shares are subject to a 1% contingent deferred sales
charge if redeemed within one year of purchase.
* Class D Shares incur a maximum initial sales charge of
5.25% and an account maintenance fee of 0.25% (but no
distribution fee).
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.
<PAGE>
<TABLE>
Recent
Performance
Results*
<CAPTION>
12 Month 3 Month
10/31/96 7/31/96 10/31/95 % Change % Change
<S> <C> <C> <C> <C> <C>
Class A Shares $5.35 $4.79 $4.65 +17.39%(1) +11.69%
Class B Shares 4.72 4.24 4.16 +16.06(1) +11.32
Class C Shares 4.72 4.24 4.16 +16.06(1) +11.32
Class D Shares 5.20 4.66 4.53 +17.19(1) +11.59
Class A Shares--Total Return +19.79(2) +11.69
Class B Shares--Total Return +18.71(2) +11.32
Class C Shares--Total Return +18.71(2) +11.32
Class D Shares--Total Return +19.65(2) +11.59
<FN>
*Investment results shown do not reflect sales charges;
results shown would be lower if a sales charge was included.
(1)Percent change includes reinvestment of $0.097
per share capital gains distributions.
(2)Percent change includes reinvestment of $0.099
per share ordinary income dividends and $0.097
per share capital gains distributions.
</TABLE>
Average Annual
Total Return+++
% Return Without % Return With
Class A Shares* Sales Charge Sales Charge**
Year Ended 9/30/96 +20.20% +13.89%
2/01/90++ through 9/30/96 +12.48 +11.58
Five Years Ended 9/30/96 +13.32 +12.10
Ten Years Ended 9/30/96 +11.52 +10.92
[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 9/30/96 +18.90% +14.90%
2/01/90++ through 9/30/96 +11.33 +11.33
Five Years Ended 9/30/96 +12.16 +12.16
Inception (10/21/88) through 9/30/96 +11.17 +11.17
[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.
% Return % Return
Class C Shares* Without CDSC With CDSC**
Year Ended 9/30/96 +18.90% +17.90%
Inception (10/21/94) through 9/30/96 +24.01 +24.01
[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**
Year Ended 9/30/96 +19.81% +13.52%
Inception (10/21/94) through 9/30/96 +23.60 +20.22
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
<PAGE>
<TABLE>
Performance
Summary--
Class A Shares+++
<CAPTION>
Net Asset Value Capital Gains Dividends
Period Covered Beginning Ending Distributed 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
1995 3.46 4.98 0.097 0.099 +49.85
1/1/96--10/31/96 4.98 5.35 -- -- + 7.43
------- ------
Total $11.482 Total $3.607
Cumulative total return as of 10/31/96: +309.11%**
<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>
PERFORMANCE DATA (concluded)
<PAGE>
<TABLE>
Performance
Summary--
Class B Shares++++
<CAPTION>
Net Asset Value Capital Gains Dividends
Period Covered Beginning Ending Distributed 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
1995 3.13 4.43 0.097 0.099 +48.09
1/1/96--10/31/96 4.43 4.72 -- -- + 6.55
------- ------
Total $ 7.565 Total $2.968
Cumulative total return as of 10/31/96: +130.48%**
<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 reflect deduction of any sales charge;
results would be lower if sales charge was deducted.
++Figure includes a $0.897 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 Dividends
Period Covered Beginning Ending Distributed Paid* % Change**
<C> <C> <C> <C> <C> <C>
10/21/94--12/31/94 $ 3.27 $ 3.13 -- -- - 4.28%
1995 3.13 4.43 $ 0.097 $0.099 +48.09
1/1/96--10/31/96 4.43 4.72 -- -- + 6.55
------- ------
Total $ 0.097 Total $0.099
Cumulative total return as of 10/31/96: +51.03%**
<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>
<PAGE>
<TABLE>
Performance
Summary--
Class D Shares
<CAPTION>
Net Asset Value Capital Gains Dividends
Period Covered Beginning Ending Distributed Paid* % Change**
<C> <C> <C> <C> <C> <C>
10/21/94--12/31/94 $ 3.61 $ 3.39 -- -- - 6.09%
1995 3.39 4.85 $ 0.097 $0.099 +49.12
1/1/96--10/31/96 4.85 5.20 -- -- + 7.22
------- ------
Total $ 0.097 Total $0.099
Cumulative total return as of 10/31/96: +50.14%**
<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 4-6 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,
include 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.
Recent
Performance
Results*
12 Month 2/01/90 to 10/31/96++
% Change % Change
Class A Shares--Total Return +19.79%(1) +194.53%(2)
Class B Shares--Total Return +18.71(1) +181.52(3)
<PAGE>
[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.
*Investment results shown do not reflect sales charges; results shown
would be lower if a sales charge was included.
(1)Percent change includes reinvestment of $0.099 per share ordinary
income dividends and $0.097 per share capital gains distributions.
(2)Percent change includes reinvestment of $2.949 per share ordinary
income dividends and $5.319 per share capital gains distributions.
(3)Percent change includes reinvestment of $2.873 per share ordinary
income dividends and $5.319 per share capital gains distributions.
Average Annual
Total Return
% Return Without % Return With
Class A Shares* Sales Charge Sales Charge**
Year Ended 9/30/96 +20.20% +13.89%
2/01/90++ through 9/30/96 +17.69 +16.74
[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,
computations are based upon management's estimates of the healthcare
portfolio.
% Return % Return
Class B Shares* Without CDSC With CDSC**
Year Ended 9/30/96 +18.90% +14.90%
2/01/90++ through 9/30/96 +16.91 +16.91
[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,
computations are based upon management's estimates of the healthcare
portfolio.
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS
<CAPTION>
MIDDLE Value Percent of
EAST Industries Shares Held Investments Cost (Note 1a) Net Assets
<S> <S> <C> <S> <C> <C> <C>
Israel Pharmaceutical-- 100,000 Teva Pharmaceuticals Industries, Inc.
Diversified (ADR)* $ 3,858,750 $ 4,175,000 1.1%
Total Investments in the Middle East 3,858,750 4,175,000 1.1
NORTH
AMERICA
United States Biotechnology 85,000 ++Aphton Corp. 2,011,375 1,434,375 0.4
100,000 ++Centocor, Inc. 3,204,851 2,925,000 0.8
129,000 ++Emisphere Technologies Inc. 1,367,255 1,935,000 0.5
175,000 Genzyme Corp. 5,919,740 4,003,125 1.0
100,000 ++Magainin Pharmaceuticals, Inc. 1,256,250 1,087,500 0.3
10,000 ++Pharmacyclics Inc. 172,500 137,500 0.0
50,000 ++Transkaryotic Therapies, Inc. 750,000 731,250 0.2
------------ ------------ ------
14,681,971 12,253,750 3.2
Diagnostics 75,000 ++Diatide, Inc. 637,500 618,750 0.2
40,000 ++Epitope Inc. 577,620 610,000 0.1
40,000 ++NeoPath, Inc. 920,000 640,000 0.2
145,500 ++VOXEL 934,850 636,562 0.2
------------ ------------ ------
3,069,970 2,505,312 0.7
Health Care Cost 400,000 Bergen Brunswig Corp. 11,321,665 12,550,000 3.3
Containment 60,000 Cardinal Health, Inc. 4,042,350 4,710,000 1.2
125,500 ++Foundation Health Corp. 4,536,529 3,749,313 1.0
50,000 ++HEALTHSOUTH Corp. 1,722,231 1,875,000 0.5
47,200 ++Healthcare Compare Corp. 2,140,969 2,070,900 0.5
15,500 McKesson Corporation 696,930 771,125 0.2
172,500 ++Walsh International, Inc. 2,489,876 1,444,687 0.4
------------ ------------ ------
26,950,550 27,171,025 7.1
<PAGE>
Medical Specialties 80,000 ++Allegiance Corporation 1,369,492 1,500,000 0.4
400,000 Baxter International, Inc. 16,357,821 16,650,000 4.3
300,000 Becton, Dickinson & Company 13,153,788 13,050,000 3.4
25,000 ++Boston Scientific Corp. 670,250 1,359,375 0.4
150,000 ++Conceptus Inc. 1,889,749 1,668,750 0.4
245,000 ++Endosonics Corp. 3,608,490 3,093,125 0.8
75,000 ++InControl, Inc. 1,071,876 590,625 0.1
90,000 ++Integra Lifesciences Corp. 742,500 405,000 0.1
165,000 ++KeraVision, Inc. 2,727,505 2,557,500 0.7
50,000 ++Medi-Ject Corporation 275,000 212,500 0.1
100,000 Medtronic, Inc. 3,644,813 6,437,500 1.7
25,000 ++North American Vaccine Inc. 542,125 556,250 0.1
400,000 ++Optical Sensors, Inc. 4,640,938 3,400,000 0.9
520,000 ++ReSound Corp. 5,679,062 3,965,000 1.0
50,000 ++Saint Jude Medical, Inc. 1,748,750 1,968,750 0.5
350,000 ++VISX, Incorporated 8,411,678 8,662,500 2.3
------------ ------------ ------
66,533,837 66,076,875 17.2
Pharmaceutical-- 225,000 American Home Products Corporation 11,865,710 13,781,250 3.6
Consumer 130,000 Bristol-Myers Squibb Co. 13,577,449 13,747,500 3.6
270,000 Johnson & Johnson Co. 10,651,930 13,297,500 3.4
350,000 Warner-Lambert Co. 19,472,998 22,268,750 5.8
------------ ------------ ------
55,568,087 63,095,000 16.4
Pharmaceutical-- 256,500 Collagen Corporation 4,844,782 4,969,687 1.3
Diversified 165,000 Schering-Plough Corp. 10,698,954 10,560,000 2.7
------------ ------------ ------
15,543,736 15,529,687 4.0
Pharmaceutical-- 80,000 ++Forest Laboratories, Inc. 3,189,264 3,080,000 0.8
Prescription 320,000 Lilly (Eli) & Co. 20,017,742 22,560,000 5.9
100,000 Merck & Co., Inc. 6,699,499 7,412,500 1.9
160,000 Pfizer, Inc. 9,930,148 13,240,000 3.4
28,200 Rhone-Poulenc Rorer Inc. 1,748,279 1,892,925 0.5
------------ ------------ ------
41,584,932 48,185,425 12.5
Total Investments in North America 223,933,083 234,817,074 61.1
PACIFIC
BASIN
Japan Pharmaceutical-- 320,000 Eisai Co. Ltd. 5,998,696 5,738,901 1.5
Diversified 200,000 Takeda Chemical Industries, Ltd. 3,522,228 3,428,571 0.9
------------ ------------ ------
9,520,924 9,167,472 2.4
Pharmaceutical-- 80,000 Daiichi Pharmaceutical Co., Ltd. 1,281,770 1,153,407 0.3
Prescription 350,000 Sankyo Company, Ltd. 8,156,324 8,676,923 2.3
------------ ------------ ------
9,438,094 9,830,330 2.6
Total Investments in the Pacific Basin 18,959,018 18,997,802 5.0
<PAGE>
WESTERN
EUROPE
Denmark Pharmaceutical-- 3,000 Novo Nordisk A/S (Class B) 460,157 499,656 0.1
Prescription
Investments in Denmark 460,157 499,656 0.1
Finland Medical Specialties 20,000 ++Instrumentarium Corp. (Group A) 595,141 737,405 0.2
Pharmaceutical-- 240,000 Orion-yhtymae OY (Class B) 7,352,403 8,133,528 2.1
Diversified
Investments in Finland 7,947,544 8,870,933 2.3
France Pharmaceutical-- 125,000 Sanofi S.A. 8,376,914 11,333,157 3.0
Diversified
Investments in France 8,376,914 11,333,157 3.0
Germany Medical Specialties 40,000 Fresenius AG (Preferred) 6,773,477 8,657,723 2.2
333,600 ++Fresenius Medical Care AG (ADR)* 5,255,159 9,924,600 2.6
------------ ------------ ------
12,028,636 18,582,323 4.8
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (concluded)
<CAPTION>
WESTERN EUROPE Value Percent of
(concluded) Industries Shares Held Investments Cost (Note 1a) Net Assets
<S> <S> <C> <S> <C> <C> <C>
Germany Pharmaceutical-- 150,000 ++Bayer AG $ 5,127,736 $ 5,672,461 1.5%
(concluded) Consumer
Pharmaceutical-- 80,000 BASF AG 2,391,907 2,558,985 0.7
Diversified 500,000 Hoechst AG 17,027,066 18,818,981 4.9
------------ ------------ ------
19,418,973 21,377,966 5.6
Investments in Germany 36,575,345 45,632,750 11.9
<PAGE>
Sweden Pharmaceutical-- 50,000 Astra AB 'B' Free (Ordinary) 2,137,750 2,284,322 0.6
Prescription
Investments in Sweden 2,137,750 2,284,322 0.6
Switzerland Pharmaceutical-- 10,520 Ciba-Geigy AG (Registered) 9,171,725 13,005,908 3.4
Consumer
Pharmaceutical-- 250 Roche Holdings AG 1,786,473 1,897,729 0.5
Prescription 10,000 Sandoz AG (Registered) 8,497,578 11,600,762 3.0
------------ ------------ ------
10,284,051 13,498,491 3.5
Investments in Switzerland 19,455,776 26,504,399 6.9
United Kingdom Pharmaceutical-- 1,505,541 SmithKline Beecham Corporation
Diversified PLC (ADR)* 16,124,565 18,562,760 4.8
Pharmaceutical-- 100,000 Glaxo Wellcome PLC 1,204,032 1,564,789 0.4
Prescription 100,000 Zeneca Group PLC 2,156,035 2,722,928 0.7
------------ ------------ ------
3,360,067 4,287,717 1.1
Investments in the United Kingdom 19,484,632 22,850,477 5.9
Total Investments in Western Europe 94,438,118 117,975,694 30.7
SHORT-TERM Face
SECURITIES Amount
Commercial Paper** $ 697,000 General Electric Capital Corp.,
5.56% due 11/01/1996 697,000 697,000 0.2
2,412,000 International Securitization
Corporation, 5.26% due 11/21/1996 2,404,952 2,404,952 0.6
5,000,000 National Fleet Funding Corp.,
5.38% due 11/08/1996 4,994,769 4,994,769 1.3
Total Investments in
Short-Term Securities 8,096,721 8,096,721 2.1
Total Investments $349,285,690 384,062,291 100.0
============
Other Assets Less Liabilities 48,150 0.0
------------ ------
Net Assets $384,110,441 100.0%
============ ======
<PAGE>
<FN>
++Non-income producing security.
*American Depositary Receipts (ADR).
**Commercial Paper is traded on a discount basis; the interest rates shown
are the discount rates paid at the time of purchase by the Company.
See Notes to Financial Statements.
</TABLE>
<TABLE>
STATEMENT OF ASSETS AND LIABILITIES
<CAPTION>
As of October 31, 1996
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$349,285,690) (Note 1a) $384,062,291
Cash 351
Foreign cash (Note 1b) 115
Receivables:
Securities sold $ 5,804,725
Capital shares sold 758,603
Dividends 419,514 6,982,842
------------
Prepaid registration fees and other assets (Note 1f) 31,578
------------
Total assets 391,077,177
------------
Liabilities: Payables:
Securities purchased 5,296,046
Capital shares redeemed 837,089
Investment adviser (Note 2) 330,747
Distributor (Note 2) 200,461 6,664,343
------------
Accrued expenses and other liabilities 302,393
------------
Total liabilities 6,966,736
------------
Net Assets: Net assets $384,110,441
============
<PAGE>
Net Assets Class A Shares of Common Stock, $0.10 par value, 100,000,000 shares authorized $ 2,546,076
Consist of: Class B Shares of Common Stock, $0.10 par value, 100,000,000 shares authorized 4,326,611
Class C Shares of Common Stock, $0.10 par value, 100,000,000 shares authorized 484,135
Class D Shares of Common Stock, $0.10 par value, 100,000,000 shares authorized 397,529
Paid-in capital in excess of par 294,557,848
Accumulated investment loss--net (925,332)
Undistributed realized capital gains on investments and foreign currency
transactions--net 47,950,947
Unrealized appreciation on investments and foreign currency transactions--net 34,772,627
------------
Net assets $384,110,441
============
Net Asset Class A--Based on net assets of $136,320,472 and 25,460,761 shares outstanding $ 5.35
Value: ============
Class B--Based on net assets of $204,244,227 and 43,266,114 shares outstanding $ 4.72
============
Class C--Based on net assets of $22,864,858 and 4,841,353 shares outstanding $ 4.72
============
Class D--Based on net assets of $20,680,884 and 3,975,285 shares outstanding $ 5.20
============
See Notes to Financial Statements.
</TABLE>
<TABLE>
STATEMENT OF OPERATIONS
<CAPTION>
For the Six Months Ended October 31, 1996
<S> <S> <C> <C>
Investment Dividends (net of $106,543 foreign withholding tax) $ 2,007,587
Income Interest and discount earned 948,112
(Notes 1d ------------
& 1e): Total income 2,955,699
------------
Expenses: Investment advisory fees (Note 2) $ 1,900,800
Account maintenance and distribution fees--Class B (Note 2) 1,023,418
Transfer agent fees--Class B (Note 2) 301,724
Transfer agent fees--Class A (Note 2) 168,728
Account maintenance and distribution fees--Class C (Note 2) 110,154
Printing and shareholder reports 70,242
Custodian fees 54,848
Registration fees (Note 1f) 52,867
Accounting services (Note 2) 49,639
Professional fees 37,684
Transfer agent fees--Class C (Note 2) 34,171
Transfer agent fees--Class D (Note 2) 27,057
Account maintenance fees--Class D (Note 2) 26,540
Directors' fees and expenses 18,401
Pricing fees 106
Other 4,652
Total expenses ------------ 3,881,031
------------
Investment loss--net (925,332)
------------
<PAGE>
Realized & Realized gain (loss) from:
Unrealized Investments--net 16,013,539
Gain (Loss) on Foreign currency transactions--net (143,820) 15,869,719
Investments & ------------
Foreign Change in unrealized appreciation/depreciation on:
Currency Trans- Investments--net (10,904,735)
actions--Net Foreign currency transactions--net (6,592) (10,911,327)
(Notes 1b, 1c, ------------ ------------
1e & 3): Net realized and unrealized gain on investments and
foreign currency transactions 4,958,392
------------
Net Increase in Net Assets Resulting from Operations $ 4,033,060
============
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: 1996 1996
<S> <S> <C> <C>
Operations: Investment loss--net $ (925,332) $ (1,951,370)
Realized gain on investments and foreign currency transactions--net 15,869,719 45,694,034
Change in unrealized appreciation/depreciation on investments and foreign
currency transactions--net (10,911,327) 34,582,479
------------ ------------
Net increase in net assets resulting from operations 4,033,060 78,325,143
------------ ------------
Distributions Realized gain on investments--net:
to Shareholders Class A -- (4,033,407)
(Note 1g): Class B -- (5,976,897)
Class C -- (376,208)
Class D -- (455,478)
------------ ------------
Net decrease in net assets resulting from distributions to shareholders -- (10,841,990)
------------ ------------
Capital Share Net increase (decrease) in net assets derived from capital
Transactions share transactions (1,743,595) 159,000,753
(Note 4): ------------ ------------
<PAGE>
Net Assets: Total increase in net assets 2,289,465 226,483,906
Beginning of period 381,820,976 155,337,070
------------ ------------
End of period $384,110,441 $381,820,976
============ ============
See Notes to Financial Statements.
</TABLE>
<TABLE>
FINANCIAL HIGHLIGHTS
<CAPTION>
Class A
For the
The following per share data and ratios have been derived Six Months
from information provided in the financial statements. Ended
October 31, For the Year Ended April 30,
Increase (Decrease) in Net Asset Value: 1996++++++ 1996++++++ 1995++++++ 1994++++++ 1993
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 5.27 $ 3.81 $ 3.87 $ 3.59 $ 3.63
Operating -------- -------- -------- -------- --------
Performance: Investment income (loss)--net --++ (.01) (.01) (.02) .02
Realized and unrealized gain (loss) on investments
and foreign currency transactions--net .08 1.67 .22 .31 (.06)
-------- -------- -------- -------- --------
Total from investment operations .08 1.66 .21 .29 (.04)
-------- -------- -------- -------- --------
Less dividends and distributions:
Investment income--net -- -- -- (.01) --
Realized gain on investments--net -- (.20) (.27) -- --
-------- -------- -------- -------- --------
Total dividends and distributions -- (.20) (.27) (.01) --
-------- -------- -------- -------- --------
Net asset value, end of period $ 5.35 $ 5.27 $ 3.81 $ 3.87 $ 3.59
======== ======== ======== ======== ========
Total Invest- Based on net asset value per share 1.52%+++ 44.01% 6.47% 8.19% (1.10%)
ment Return:** ======== ======== ======== ======== ========
Ratios to Expenses 1.41%* 1.53% 1.79% 1.55% 1.85%
Average ======== ======== ======== ======== ========
Net Assets: Investment Income (loss)--net .14%* (.23%) (.21%) (.48%) .48%
======== ======== ======== ======== ========
<PAGE>
Supplemental Net assets, end of period (in thousands) $136,320 $132,083 $ 69,650 $ 70,753 $ 63,528
Data: ======== ======== ======== ======== ========
Portfolio turnover 66.51% 133.50% 196.91% 133.58% 103.06%
======== ======== ======== ======== ========
Average commission rate paid+++++++ $ .0761 $ .0977 -- -- --
======== ======== ======== ======== ========
<CAPTION>
Class B++++++
For the
The following per share data and ratios have been derived Six Months
from information provided in the financial statements. Ended
October 31, For the Year Ended April 30,
Increase (Decrease) in Net Asset Value: 1996 1996 1995 1994 1993
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 4.67 $ 3.43 $ 3.55 $ 3.31 $ 3.38
Operating -------- -------- -------- -------- --------
Performance: Investment loss--net (.02) (.05) (.04) (.05) (.01)
Realized and unrealized gain (loss) on investments
and foreign currency transactions--net .07 1.49 .19 .29 (.06)
-------- -------- -------- -------- --------
Total from investment operations .05 1.44 .15 .24 (.07)
-------- -------- -------- -------- --------
Less dividends and distributions:
Investment income--net -- -- -- -- --
Realized gain on investments--net -- (.20) (.27) -- --
-------- -------- -------- -------- --------
Total dividends and distributions -- (.20) (.27) -- --
-------- -------- -------- -------- --------
Net asset value, end of period $ 4.72 $ 4.67 $ 3.43 $ 3.55 $ 3.31
======== ======== ======== ======== ========
Total Invest- Based on net asset value per share 1.07%+++ 42.46% 5.29% 7.25% (2.07%)
ment Return:** ======== ======== ======== ======== ========
Ratios to Expenses 2.45%* 2.55% 2.85% 2.56% 2.89%
Average ======== ======== ======== ======== ========
Net Assets: Investment loss--net (.89%)* (1.24%) (1.29%) (1.52%) (.41%)
======== ======== ======== ======== ========
Supplemental Net assets, end of period (in thousands) $204,244 $207,413 $ 79,485 $ 63,692 $ 33,071
Data: ======== ======== ======== ======== ========
Portfolio turnover 66.51% 133.50% 196.91% 133.58% 103.06%
======== ======== ======== ======== ========
Average commission rate paid+++++++ $ .0761 $ .0977 -- -- --
======== ======== ======== ======== ========
<PAGE>
<CAPTION>
Class C++++++ Class D++++++
For the For the For the For the
The following per share data and ratios have Six For the Period Six For the Period
been derived from information provided in the Months Year Oct. 21, Months Year Oct. 21,
financial statements. Ended Ended 1994++ to Ended Ended 1994++ to
Oct. 31, April 30, April 30, Oct. 31, April 30, April 30,
Increase (Decrease) in Net Asset Value: 1996 1996 1995 1996 1996 1995
<S> <S> <C> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 4.68 $ 3.43 $ 3.27 $ 5.13 $ 3.72 $ 3.61
Operating -------- -------- --------- --------- --------- --------
Performance: Investment loss--net (.02) (.05) (.04) --++ (.02) (.02)
Realized and unrealized gain on investments
and foreign current transactions--net .06 1.50 .20 .07 1.63 .13
-------- -------- --------- --------- --------- --------
Total from investment operations .04 1.45 .16 .07 1.61 .11
-------- -------- --------- --------- --------- --------
Less distributions from realized gain on
investments--net -- (.20) -- -- (.20) --
-------- -------- --------- --------- --------- --------
Net asset value, end of period $ 4.72 $ 4.68 $ 3.43 $ 5.20 $ 5.13 $ 3.72
======== ======== ========= ========= ========= ========
Total Invest- Based on net asset value per share .85%+++ 42.76% 4.89%+++ 1.36%+++ 43.74% 3.05%+++
ment Return:** ======== ======== ========= ========= ========= ========
Ratios to Expenses 2.46%* 2.52% 3.28%* 1.66%* 1.75% 2.44%*
Average ======== ======== ========= ========= ========= ========
Net Assets: Investment loss--net (.93%)* (1.19%) (2.13%)* (.10%)* (.44%) (1.23%)*
======== ======== ========= ========= ========= ========
Supplemental Net assets, end of period (in thousands) $ 22,865 $ 20,761 $ 1,816 $ 20,681 $ 21,564 $ 4,386
Data: ======== ======== ========= ========= ========= ========
Portfolio turnover 66.51% 133.50% 196.91% 66.51% 133.50% 196.91%
======== ======== ========= ========= ========= ========
Average commission rate paid+++++++ $ .0761 $ .0977 -- $ .0761 $ .0977 --
======== ======== ========= ========= ========= ========
<FN>
*Annualized.
**Total investment returns exclude the effects of sales loads.
++Amount is less than $.01 per share.
++++Commencement of Operations.
++++++Calculation is based on the average number of shares
outstanding during the period.
+++Aggregate total investment return.
+++++++For fiscal years beginning on or after September 1, 1995,
the Fund is required to disclose its average commission
rate per share for purchases and sales of equity securities.
The "Average Commission Rate Paid" includes commissions paid
in foreign currencies, which have been converted into US
dollars using the prevailing exchange rate on the date of
the transaction. Such conversions may materially affect
the rate shown.
<PAGE>
See Notes to Financial Statements.
</TABLE>
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 securities--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 approximates market value.
Other investments, including futures contracts and related options,
are stated at market value. Securities and assets for which market
quotations are not available are valued at fair value as determined
in good faith by or under the direction of the 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 contracts
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 mar-
gin as required by the exchange on which the transaction 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 payments 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 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 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 transaction 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 transac-
tions 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. Real-
ized 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 compensa-
tion for its services to the Company, MLAM receives monthly com-
pensation at the annual rate of 1.0% of the average daily net assets
of the Company.
Pursuant to the distribution plans (the "Distribution Plans") adopted
by the Company in accordance with Rule 12b-1 under the Invest-
ment 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.
For the six months ended October 31, 1996, MLFD earned under-
writing discounts and direct commissions 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 $ 7,715
Class D $2,439 $52,943
For the six months ended October 31, 1996, MLPF&S received
contingent deferred sales charges of $237,438 and $12,951 relating
to transactions in Class B and Class C Shares, respectively.
<PAGE>
NOTES TO FINANCIAL STATEMENTS (concluded)
In addition, MLPF&S received $153,147 in commissions on the
execution of portfolio security transactions for the Company for
the six months ended October 31, 1996.
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, 1996 were $241,313,401
and $232,230,130, respectively.
Net realized and unrealized gains (losses) as of October 31, 1996
were as follows:
Realized Unrealized
Gains (Losses) Gains (Losses)
Long-term investments $16,014,633 $34,776,601
Short-term investments (1,094) --
Foreign currency transactions (143,820) (3,974)
----------- -----------
Total $15,869,719 $34,772,627
=========== ===========
As of October 31, 1996, net unrealized appreciation for Federal
income tax purposes aggregated $34,776,601, of which $45,848,518
related to appreciated securities and $11,071,917 related to
depreciated securities. The aggregate cost of investments at
October 31, 1996 for Federal income tax purposes was $349,285,690.
4. Capital Share Transactions:
Net increase (decrease) in net assets derived from capital share
transactions was $(1,743,595) and $159,000,753 for the six months
ended October 31, 1996 and the year ended April 30, 1996,
respectively.
Transactions in capital shares for each class were as follows:
Class A Shares for the Six Dollar
Months Ended October 31, 1996 Shares Amount
<PAGE>
Shares sold 3,614,983 $ 18,788,894
Shares redeemed (3,201,122) (16,541,424)
----------- ------------
Net increase 413,861 $ 2,247,470
=========== ============
Class A Shares for the Year Dollar
Ended April 30, 1996 Shares Amount
Shares sold 10,277,222 $ 49,677,305
Shares issued to shareholders
in reinvestment of distributions 737,767 3,519,148
----------- ------------
Total issued 11,014,989 53,196,453
Shares redeemed (4,237,137) (19,882,706)
----------- ------------
Net increase 6,777,852 $ 33,313,747
=========== ============
Class B Shares for the Six Dollar
Months Ended October 31, 1996 Shares Amount
Shares sold 6,448,384 $ 29,756,797
Automatic conversion of shares (74,007) (341,090)
Shares redeemed (7,484,403) (34,159,634)
----------- ------------
Net decrease (1,110,026) $ (4,743,927)
=========== ============
Class B Shares for the Year Dollar
Ended April 30, 1996 Shares Amount
Shares sold 31,670,575 $137,932,842
Shares issued to shareholders
in reinvestment of distributions 1,257,829 5,333,197
----------- ------------
Total issued 32,928,404 143,266,039
Automatic conversion of shares (274,090) (1,131,610)
Shares redeemed (11,442,314) (47,991,244)
----------- ------------
Net increase 21,212,000 $ 94,143,185
=========== ============
<PAGE>
Class C Shares for the Six Dollar
Months Ended October 31, 1996 Shares Amount
Shares sold 1,298,435 $ 5,959,260
Shares redeemed (896,674) (4,107,555)
----------- ------------
Net increase 401,761 $ 1,851,705
=========== ============
Class C Shares for the Year Dollar
Ended April 30, 1996 Shares Amount
Shares sold 4,706,948 $ 20,619,006
Shares issued to shareholders
in reinvestment of distributions 81,297 344,700
----------- ------------
Total issued 4,788,245 20,963,706
Shares redeemed (877,644) (3,793,037)
----------- ------------
Net increase 3,910,601 $ 17,170,669
=========== ============
Class D Shares for the Six Dollar
Months Ended October 31, 1996 Shares Amount
Shares sold 3,403,566 $ 17,215,643
Automatic conversion of shares 67,343 341,090
----------- ------------
Total issued 3,470,909 17,556,733
Shares redeemed (3,698,602) (18,655,576)
----------- ------------
Net decrease (227,693) $ (1,098,843)
=========== ============
Class D Shares for the Year Dollar
Ended April 30, 1996 Shares Amount
Shares sold 5,979,086 $ 28,807,012
Shares issued to shareholders
in reinvestment of distributions 85,423 396,362
Automatic conversion of shares 251,321 1,131,610
----------- ------------
Total issued 6,315,830 30,334,984
Shares redeemed (3,290,897) (15,961,832)
----------- ------------
Net increase 3,024,933 $ 14,373,152
=========== ============
PORTFOLIO CHANGES
For the Quarter Ended October 31, 1996
Additions
*Aetna Inc.
Allegiance Corporation
Astra AB 'B' Free (Ordinary)
BASF AG
Becton, Dickinson & Company
Bristol-Myers Squibb Co.
*Community Psychiatric Centers
Daiichi Pharmaceutical Co., Ltd.
Forest Laboratories, Inc.
Fresenius Medical Care AG (ADR)
*Heartstream Inc.
Magainin Pharmaceuticals, Inc.
McKesson Corporation
Medi-Ject Corporation
North American Vaccine Inc.
Novo Nordisk A/S (Class B)
Pharmacyclics Inc.
Schering-Plough Corp.
Transkaryotic Therapies, Inc.
<PAGE>
Deletions
AKZO N.V.
*Aetna Inc.
*Community Psychiatric Centers
FHP International Corporation
Fresenius USA Inc.
*Heartstream Inc.
IBAH Inc.
ISG Technologies, Inc.
Medaphis Corporation
NABI, Inc.
Neurex Corp.
OrNda HealthCorp.
Pacificare Health Systems, Inc. (Class B)
Pharmacia & Upjohn Inc.
Ranbaxy Laboratories Ltd. (GDR)
Taisho Pharmaceutical Co., Ltd.
Tenet Healthcare Corp.
Ventritex, Inc.
[FN]
*Added and deleted in the same quarter.
