MERRIL LLYNCH
HEALTHCARE
FUND, INC.
FUND LOGO
Quarterly Report
July 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 Company's current prospectus. Past
performance results shown in this report should not be considered a
representation of future performance. Investment return and
principal value of shares will fluctuate so that shares, when
redeemed, may be worth more or less than their original cost.
Statements and other information herein are as dated and are
subject to change.
<PAGE>
Merrill Lynch
Healthcare Fund, Inc.
Box 9011
Princeton, NJ
08543-9011
MERRILL LYNCH HEALTHCARE FUND, INC.
Worldwide
Iinvestments
As Of 7/31/96
Ten Largest Holdings Percent of
Represented in the Portfolio Net Assets
American Home Products
Corporation 5.7%
Warner-Lambert Co. 5.5
Hoechst AG 4.7
Johnson & Johnson Co. 3.7
Ciba-Geigy AG (Registered) 3.6
Pacificare Health Systems, Inc.
(Class B) 3.4
SmithKline Beecham Corporation
PLC (ADR) 3.4
Sandoz AG (Registered) 3.2
Lilly (Eli) & Co. 3.2
Pfizer, Inc. 2.8
<PAGE>
Breakdown of Securities Percent of
By Country Net Assets
United States 51.7%
Switzerland 8.9
Germany 6.8
United Kingdom 6.8
Japan 4.4
France 2.8
Finland 2.5
Israel 0.9
Netherlands 0.6
Canada 0.2
India 0.1
Industries Represented Percent of
In the Portfolio Net Assets
Pharmaceutical--Consumer 19.0%
Pharmaceutical--Diversified 18.3
Pharmaceutical--Prescription 18.2
Medical Specialties 14.5
Health Care Cost Containment 11.2
Biotechnology 3.3
Diagnostics 1.2
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
DEAR SHAREHOLDER
The quarter ended July 31, 1996 was turbulent for stocks in general,
and was especially so for the healthcare sector. The Fund's total
returns declined during the quarter. The decreases were largely
attributable to substantial weakness in small-capitalization
healthcare stock holdings and to a pullback in several foreign
markets, especially Swiss pharmaceutical shares, as the Zurich
market closely mirrored the volatility in the United States. The
total returns for Merrill Lynch Healthcare Fund, Inc.'s Class A,
Class B, Class C and Class D Shares during the quarter were -9.11%,
- -9.21%, -9.40% and -9.16%, respectively. (Results shown do not
reflect sales charges and would be lower if sales charges were
included. Complete performance data, including average annual total
returns, can be found on pages 4--7 of this report to shareholders.)
Investment Outlook
In the United States, investor concerns focused on the economy
during the July quarter. A report of robust growth in employment for
the month of June gave rise to expectations of an increasing rate of
inflation. In this environment, it seemed possible that the Federal
Reserve Board would move to raise short-term interest rates in an
effort to contain inflationary pressures. Many investors anticipated
that higher interest rates would choke off economic growth and slow
corporate earnings growth. Against this backdrop, US share prices
declined.
Within the healthcare sector, health maintenance organizations
(HMOs) and biotechnology stocks sustained especially significant
price declines. HMOs reported disappointing earnings for the first
quarter of 1996. As a result, their share prices declined over 30%,
on average, during the July quarter. The average share price decline
for biotechnology stocks during the period was almost 20%. The boom
in initial public offerings came to an apparent end as the liquidity
that had buoyed biotechnology stocks evaporated. If interest rates
increase further, liquidity would be more constrained.
<PAGE>
Although biotechnology shares accounted for only 8.7% of the Fund's
assets at the beginning of the July quarter, the magnitude of the
decline in biotechnology and other smaller-capitalization healthcare
groups negatively impacted performance and accounted for a substantial
portion of the total return decline. The poor performance of the Swiss
stock market also contributed to the Fund's decline during the quarter,
since Switzerland is the portfolio's second-largest country weighting.
At the beginning of the quarter, three Swiss pharmaceutical
companies--Ciba-Geigy AG, Sandoz AG and Roche Holdings AG--represented
13.2% of the Fund's net assets. The forthcoming merger of Ciba-Geigy
AG and Sandoz AG has led to considerable arbitrage activity and
profit-taking following its announcement in the prior quarter.
This activity coincided with the turbulence in the US stock
market and accentuated the volatility of the Fund's Swiss holdings.
The performance of pharmaceutical companies outpaced the rest of the
healthcare sector. Historically, US pharmaceutical stocks have been
viewed as defensive investments, especially in times of economic
uncertainty. Moreover, the performance of pharmaceutical stocks
during the July quarter was helped by accelerating Food and Drug
Administration new drug approvals and June quarterly earnings
reports that were in line with expectations. Share prices for US
pharmaceutical stocks overall were relatively unchanged for the July
quarter. In the event of further economic concerns, we would expect
the performance of large-capitalization pharmaceutical shares to
benefit from a "flight to quality."
Investment Strategy
During the July quarter, we continued to focus the Fund's
investments in pharmaceutical and medical device companies. These
are areas within the healthcare sector whose shares, we believe, are
least vulnerable to price declines. As a defensive move, we
increased investments in highly liquid stocks with predictable
earnings growth. For example, we increased our investments in
Johnson & Johnson Co., Warner-Lambert Co. and American Home Products
Corporation during the July quarter. At the same time, we reduced
investments in smaller-capitalization companies by trimming
positions in selected biotechnology and diagnostics companies.
We continue to emphasize the global diversification of the portfolio
with approximately one-third of the Fund's investments outside of
the United States. Europe appears to be in a less buoyant growth
phase of the economic cycle than is the United States, which could
benefit healthcare companies which possess better relative earnings
prospects than many other companies. As with our US holdings, we
have focused our international investments in highly liquid shares
of companies with steady and predictable earnings growth. This
strategy is exemplified by investments such as Hoechst AG and
Fresenius AG in Germany, as well as Ciba-Geigy AG, Sandoz AG and
Roche Holdings AG in Switzerland. Cash or equivalents rose to 16.3%
of the Fund's net assets on July 31, up from 6.6% at the end of
April. This increase did not indicate a change in strategy, but
rather pending transactions in common stocks that were in process at
the time.
<PAGE>
In Conclusion
We thank you for your continued 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
August 29, 1996
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:
<PAGE>
* 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.
Average Annual
Total Return+++
% Return Without % Return With
Class A Shares* Sales Charge Sales Charge**
Year Ended 6/30/96 +32.81% +25.84%
2/01/90++ through 6/30/96 +12.51 +11.56
Five Years Ended 6/30/96 +13.66 +12.44
Ten Years Ended 6/30/96 +10.73 +10.13
[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 6/30/96 +31.64% +27.64%
2/01/90++ through 6/30/96 +11.36 +11.36
Five Years Ended 6/30/96 +12.50 +12.50
Inception (10/21/88)
through 6/30/96 +11.19 +11.19
[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 6/30/96 +31.64% +30.64%
Inception (10/21/94)
through 6/30/96 +26.13 +26.13
[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 6/30/96 +32.63% +25.67%
Inception (10/21/94)
through 6/30/96 +25.53 +21.60
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
<TABLE>
Recent
Performance
Results*
<CAPTION>
12 Month 3 Month
7/31/96 4/30/96 7/31/95 % Change % Change
<S> <C> <C> <C> <C> <C>
Class A Shares $4.79 $5.27 $4.33 +12.87%(1) -9.11%
Class B Shares 4.24 4.67 3.88 +11.78(1) -9.21
Class C Shares 4.24 4.68 3.89 +11.49(1) -9.40
Class D Shares 4.66 5.13 4.22 +12.74(1) -9.16
Class A Shares--Total Return +15.18(2) -9.11
Class B Shares--Total Return +14.34(2) -9.21
Class C Shares--Total Return +14.04(2) -9.40
Class D Shares--Total Return +15.10(2) -9.16
<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>
<PAGE>
<TABLE>
Performance
Summary--
Class A Shares+++
<CAPTION>
Net Asset Value Capital Gains Dividends
Period Covered Beginning Ending Distributed Paid* % Change**
<S> <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--7/31/96 4.98 4.79 -- -- - 3.82
------- ------
Total $11.482 Total $3.607
Cumulative total return as of 7/31/96: +266.29%**
<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 Dividends
Period Covered Beginning Ending Distributed Paid* % Change**
<S> <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--7/31/96 4.43 4.24 -- -- - 4.29
------ ------
Total $7.565 Total $2.968
Cumulative total return as of 7/31/96: +107.05%**
<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 Dividends
Period Covered Beginning Ending Distributed Paid* % Change**
<S> <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--7/31/96 4.43 4.24 -- -- - 4.29
------ ------
Total $0.097 Total $0.099
Cumulative total return as of 7/31/96: +35.67%**
<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**
<S> <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--7/31/96 4.85 4.66 -- -- - 3.92
------ ------
Total $0.097 Total $0.099
Cumulative total return as of 7/31/96: +34.55%**
<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.
+++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.
</TABLE>
Average Annual
Total Return
% Return Without % Return With
Class A Shares* Sales Charge Sales Charge**
Year Ended 6/30/96 +32.81% +25.84%
Five Years Ended 6/30/96 +13.66 +12.44
2/01/90++ through 6/30/96 +17.93 +16.94
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
++Due to 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>
% Return % Return
Class B Shares* Without CDSC With CDSC**
Year Ended 6/30/96 +31.64% +27.64%
Five Years Ended 6/30/96 +12.50 +12.50
2/01/90++ through 6/30/96 +17.16 +17.16
[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.
<TABLE>
Recent
Performance
Results*
<CAPTION>
12 Month 2/01/90 to 7/31/96++
% Change % Change
<S> <C> <C>
Class A Shares--Total Return +15.18%(1) +163.70%(2)
Class B Shares--Total Return +14.34(1) +152.89(3)
<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 $8.949 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.
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS
<CAPTION>
MIDDLE Shares Percent of
EAST Industries Held Investments Cost Value Net Assets
<S> <S> <C> <S> <C> <C> <C>
Israel Pharmaceutical-- 100,000 Teva Pharmaceuticals
Diversified Industries, Inc. (ADR)* $ 3,858,750 $ 3,225,000 0.9%
Total Investments in the
Middle East 3,858,750 3,225,000 0.9
<PAGE>
NORTH
AMERICA
Canada Medical 250,000 ISG Technologies, Inc. 1,173,452 873,362 0.2
Specialties
Investments in Canada 1,173,452 873,362 0.2
United States Biotechnology 75,000 Aphton Corp. 1,842,625 1,256,250 0.4
139,600 Centocor, Inc. 4,590,851 3,490,000 1.0
129,000 Emisphere Technologies Inc. 1,367,255 951,375 0.3
190,000 Genzyme Corp. 6,459,896 4,702,500 1.3
80,000 Neurex Corp. 1,820,000 1,090,000 0.3
------------ ------------ ------
16,080,627 11,490,125 3.3
Diagnostics 75,000 Diatide, Inc. 637,500 440,625 0.1
61,800 Epitope Inc. 894,309 865,200 0.2
103,000 NeoPath, Inc. 2,369,000 2,420,500 0.7
145,500 VOXEL 934,850 582,000 0.2
------------ ------------ ------
4,835,659 4,308,325 1.2
Health Care Cost 250,000 Bergen Brunswig Corp. 6,832,025 6,500,000 1.9
Containment 30,000 Cardinal Health, Inc. 1,888,050 2,085,000 0.6
70,000 FHP International Corporation 2,003,750 1,828,750 0.5
100,000 Foundation Health Corp. 3,789,124 2,450,000 0.7
50,000 HEALTHSOUTH Corp. 1,722,231 1,518,750 0.5
37,200 Healthcare Compare Corp. 1,728,156 1,436,850 0.4
495,000 IBAH Inc. 3,185,573 3,093,750 0.9
60,000 Medaphis Corporation 1,344,250 2,212,500 0.6
70,000 OrNda HealthCorp. 1,154,875 1,610,000 0.5
175,000 Pacificare Health Systems,
Inc. (Class B) 13,482,993 11,812,500 3.4
150,000 Tenet Healthcare Corp. 2,690,814 2,906,250 0.8
195,000 Walsh International, Inc. 2,779,250 1,438,125 0.4
------------ ------------ ------
42,601,091 38,892,475 11.2
Medical 200,000 Baxter International, Inc. 8,964,313 8,325,000 2.4
Specialties 25,000 Boston Scientific Corp. 670,250 1,193,750 0.3
70,000 Conceptus Inc. 980,000 595,000 0.2
245,000 Endosonics Corp. 3,608,490 3,031,875 0.9
300,000 Fresenius USA Inc. 5,255,159 5,887,500 1.7
75,000 InControl, Inc. 1,071,876 675,000 0.2
165,000 Integra Lifesciences Corp. 1,361,250 763,125 0.2
165,000 KeraVision, Inc. 2,727,505 2,227,500 0.6
100,000 Medtronic, Inc. 3,644,813 4,737,500 1.4
15,000 NABI, Inc. 147,587 131,250 0.0
250,000 Optical Sensors, Inc. 3,092,188 1,562,500 0.5
410,000 ReSound Corp. 4,784,062 3,741,250 1.1
50,000 Saint Jude Medical, Inc. 1,748,750 1,668,750 0.5
350,000 VISX, Incorporated 8,411,678 6,387,500 1.8
200,000 Ventritex, Inc. 3,590,630 2,500,000 0.7
------------ ------------ ------
50,058,551 43,427,500 12.5
<PAGE>
Pharmaceutical-- 350,000 American Home Products
Consumer Corporation 17,855,673 19,862,500 5.7
270,000 Johnson & Johnson Co. 10,651,930 12,892,500 3.7
350,000 Warner-Lambert Co. 19,472,998 19,075,000 5.5
------------ ------------ ------
47,980,601 51,830,000 14.9
Pharmaceutical-- 256,500 Collagen Corporation 4,844,782 4,328,438 1.3
Diversified
Pharmaceutical-- 195,000 Lilly (Eli) & Co. 12,146,486 10,920,000 3.2
Prescription 40,000 Merck & Co., Inc. 2,594,275 2,570,000 0.7
140,000 Pfizer, Inc. 8,473,436 9,782,500 2.8
30,000 Rhone-Poulenc Rorer Inc. 1,859,787 1,980,000 0.6
------------ ------------ ------
25,073,984 25,252,500 7.3
Investments in the
United States 191,475,295 179,529,363 51.7
Total Investments in
North America 192,648,747 180,402,725 51.9
PACIFIC
BASIN
India Pharmaceutical-- 10,000 Ranbaxy Laboratories Ltd.
Prescription (GDR)** 227,500 200,000 0.1
Investments in India 227,500 200,000 0.1
Japan Pharmaceutical-- 250,000 Eisai Co. Ltd. 4,702,187 4,609,265 1.3
Diversified 4,000 Taisho Pharmaceutical Co., Ltd. 83,520 86,102 0.0
200,000 Takeda Chemical Industries,
Ltd. 3,522,228 3,500,234 1.0
------------ ------------ ------
8,307,935 8,195,601 2.3
Pharmaceutical-- 280,000 Sankyo Company, Ltd. 6,432,998 7,258,774 2.1
Prescription
Investments in Japan 14,740,933 15,454,375 4.4
Total Investments in the
Pacific Basin 14,968,433 15,654,375 4.5
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (concluded)
<CAPTION>
WESTERN Shares Percent of
EUROPE Industries Held Investments Cost Value Net Assets
<S> <S> <C> <S> <C> <C> <C>
Finland Medical 20,000 Instrumentarium Corp.
Specialties (Group A) $ 595,141 $ 641,811 0.2%
Pharmaceutical-- 240,000 Orion-yhtymae OY (Class B) 7,352,403 7,862,189 2.3
Diversified
Investments in Finland 7,947,544 8,504,000 2.5
France Pharmaceutical-- 125,000 Sanofi S.A. 8,376,914 9,717,359 2.8
Diversified
Investments in France 8,376,914 9,717,359 2.8
Germany Medical 30,000 Fresenius AG (Preferred) 4,955,507 5,675,951 1.6
Specialties
Pharmaceutical-- 50,000 Bayer AG 1,716,724 1,681,386 0.5
Consumer
Pharmaceutical-- 500,000 Hoechst AG 17,027,066 16,484,375 4.7
Diversified
Investments in Germany 23,699,297 23,841,712 6.8
Netherlands Pharmaceutical-- 17,200 AKZO N.V. 1,901,238 1,930,538 0.6
Diversified
Investments in the Netherlands 1,901,238 1,930,538 0.6
Switzerland Pharmaceutical-- 10,520 Ciba-Geigy AG (Registered) 9,171,725 12,482,398 3.6
Consumer
Pharmaceutical-- 1,000 Roche Holdings AG 6,459,518 7,373,080 2.1
Prescription 10,000 Sandoz AG (Registered) 8,497,578 11,155,645 3.2
------------ ------------ ------
14,957,096 18,528,725 5.3
Investments in Switzerland 24,128,821 31,011,123 8.9
United Kingdom Pharmaceutical-- 1,100,000 SmithKline Beecham
Diversified Corporation PLC (ADR)* 11,583,918 11,671,910 3.4
Pharmaceutical-- 100,000 Glaxo Wellcome PLC 1,204,032 1,390,679 0.4
Prescription 200,000 Pharmacia & Upjohn Inc. 8,098,880 8,250,000 2.4
100,000 Zeneca Group PLC 2,156,035 2,161,033 0.6
------------ ------------ ------
11,458,947 11,801,712 3.4
<PAGE>
Investments in the
United Kingdom 23,042,865 23,473,622 6.8
Total Investments in
Western Europe 89,096,679 98,478,354 28.4
SHORT-TERM Face
SECURITIES Amount
Commercial $15,079,000 Delaware Funding Corp.,
Paper*** 5.32% due 8/23/1996 15,029,976 15,029,976 4.3
7,653,000 Ford Motor Credit Co.,
5.72% due 8/01/1996 7,653,000 7,653,000 2.2
8,000,000 Goldman Sachs Group L.P.,
5.33% due 8/12/1996 7,986,971 7,986,971 2.3
10,975,000 Lucent Technologies, Inc.,
5.34% due 8/02/1996 10,973,372 10,973,372 3.2
15,000,000 National Rural Utilities
Cooperative Finance Corp.,
5.39% due 9/13/1996 14,903,429 14,903,429 4.3
Total Investments in
Short-Term Securities 56,546,748 56,546,748 16.3
Total Investments $357,119,357 354,307,202 102.0
============
Liabilities in Excess of Other Assets (6,887,993) (2.0)
------------ ------
Net Assets $347,419,209 100.0%
============ ======
Net Asset Value: Class A--Based on net assets of $120,592,461
and 25,150,144 shares outstanding $ 4.79
============
Class B--Based on net assets of $187,238,454
and 44,173,975 shares outstanding $ 4.24
============
Class C--Based on net assets of $20,246,694
and 4,774,314 shares outstanding $ 4.24
============
Class D--Based on net assets of $19,341,600
and 4,148,708 shares outstanding $ 4.66
============
<FN>
*American Depositary Receipts (ADR).
**Global Depositary Receipts (GDR).
***Commercial Paper is traded on a discount basis; the interest
rates shown are the discount rates paid at the time of purchase by
the Company.
</TABLE>
<PAGE>
PORTFOLIO CHANGES
For the Quarter Ended July 31, 1996
Additions
AKZO N.V.
*Allergan, Inc.
Aphton Corp.
*Bard (C.R.), Inc.
Bergen Brunswig Corp.
Centocor, Inc.
Diatide, Inc.
Foundation Health Corp.
*IDEC Pharmaceuticals Corp.
*IVAX Corp.
*Imagyn Medical, Inc.
Instrumentarium Corp. (Group A)
NABI, Inc.
*Neurocrine Biosciences, Inc.
*OXiGENE, Inc.
Pacificare Health Systems, Inc. (Class B)
Ranbaxy Laboratories Ltd. (GDR)
Taisho Pharmaceutical Co., Ltd.
Takeda Chemical Industries, Ltd.
Zeneca Group PLC
Deletions
*Allergan, Inc.
Amgen, Inc.
Astra AB 'B' Free
*Bard (C.R.), Inc.
Biochem Pharma, Inc.
Cardiometrics, Inc.
Caremark International, Inc.
Coram Healthcare Corp.
Diagnostic Products Corporation
Elan Corporation PLC (ADR)
Gilead Sciences Inc.
*IDEC Pharmaceuticals Corp.
*IVAX Corp.
*Imagyn Medical, Inc.
Imclone Systems, Inc.
Laser Industries Ltd.
Matrix Pharmaceutical Inc.
Medpartners/Mullikin Inc.
Nellcor Puritan Bennet, Inc.
*Neurocrine Biosciences, Inc.
Olsten Corporation (The)
*OXiGENE, Inc.
Parexel International Corp.
PerSeptive Biosystems, Inc.
R.P. Scherer Corporation
Synthelabo SA
U.S. Bioscience, Inc.
[FN]
*Added and deleted in the same quarter.
