MERRILL LYNCH
HEALTHCARE
FUND, INC.
FUND LOGO
Quarterly Report
January 31, 1997
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
Printed on post-consumer recycled paper
MERRILL LYNCH HEALTHCARE FUND, INC.
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
<PAGE>
Custodian
The Chase Manhattan Bank
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
DEAR SHAREHOLDER
Equity markets worldwide became more volatile during the quarter
ended January 31, 1997. In the United States, a post-election stock
market rally in November reflected investors' expectations of a
bipartisan approach to legislation with a Democratic President and a
Republican-majority Congress. For healthcare investors, this outcome
meant that it was highly unlikely that there would be a move toward
comprehensive healthcare reform legislation as the Clinton
Administration sought after the previous Presidential election.
Healthcare issues participated strongly in this stock market rally.
Then in December, a combination of profit-taking and concern about a
resurgence of inflation led to a decline in pharmaceutical share
prices. Subsequently, as slow economic growth appeared to be the
basic trend with little evidence of inflation, virtually all share
prices in the healthcare sector advanced once again. A slow growth,
low inflation environment is an ideal economic climate for the
pharmaceutical industry.
Outside of the United States, foreign stock markets followed the US
pattern with the exception of Japan. In that country, economic
weakness further depressed Japanese share prices in general. In
addition, the anticipation of drug reimbursement price cuts in the
spring led to weakness in the pharmaceutical sector.
Portfolio Matters
During the quarter ended January 31, 1997, Merrill Lynch Healthcare
Fund, Inc.'s Class A, Class B, Class C and Class D Shares had total
returns of +9.04%, +8.72, +8.79% and +9.06%, respectively. (Fund
results 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 3--7 of this
report to shareholders.)
<PAGE>
During the January quarter, we continued to emphasize pharmaceutical
and medical device companies in the Fund's portfolio. We broadened
our investments through the addition of several promising smaller
companies such as Coulter Pharmaceuticals, Inc. and Sangstat Medical
Corp. Coulter Pharmaceuticals, Inc. is a biotechnology company that
is developing an innovative cancer treatment with success in early
clinical trials. Sangstat Medical Corp. focuses on drugs to treat
immuno-suppression in organ transplant patients. Our investments
continue to be diversified geographically, with almost one-third of
the portfolio invested in non-US companies.
Late in the quarter, the US Food and Drug Administration approved
Rezulin for sale in the United States. This significant
pharmaceutical advance for treatment of insulin-dependent diabetes
was discovered by Sankyo Company, Ltd., who will market the drug in
Japan, and was co-developed with Warner-Lambert Co. in the United
States and Glaxo Wellcome PLC in Europe. Pfizer, Inc. will co-market
Rezulin in the United States. The Fund has investments in all of
these companies. We expect that this new product will be important
commercially as well as therapeutically.
In Conclusion
We thank you for your investment in Merrill Lynch Healthcare Fund,
Inc., and we look forward to sharing our outlook and strategy with
you again in our upcoming annual report to shareholders.
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
(Jordan C. Schreiber)
Jordan C. Schreiber
Vice President and Portfolio Manager
<PAGE>
February 25, 1997
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.
Average Annual
Total Return+++
% Return Without % Return With
Sales Charge Sales Charge**
<PAGE>
Class A Shares*
Year Ended 12/31/96 +11.91% + 6.03%
2/01/90++ through 12/31/96 +12.57 +11.70
Five Years Ended 12/31/96 +10.81 + 9.62
Ten Years Ended 12/31/96 +11.56 +10.96
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
++On February 1, 1990, Merrill Lynch Asset Management, L.P. became
the sole investment adviser.
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 12/31/96 +10.69% + 6.80%
2/01/90++ through 12/31/96 +11.41 +11.41
Five Years Ended 12/31/96 + 9.65 + 9.65
Inception (10/21/88) through 12/31/96 +11.24 +11.24
[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, L.P. became
the sole investment adviser.
% Return % Return
Without CDSC With CDSC**
Class C Shares*
Year Ended 12/31/96 +10.76% + 9.79%
Inception (10/21/94) through 12/31/96 +22.82 +22.82
[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
Sales Charge Sales Charge**
<PAGE>
Class D Shares*
Year Ended 12/31/96 +11.78% + 5.92%
Inception (10/21/94) through 12/31/96 +22.65 +19.68
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
+++See Important Note on page 6.
PERFORMANCE DATA (continued)
<TABLE>
Recent
Performance
Results*
<CAPTION>
12 Month 3 Month
1/31/97 10/31/96 1/31/96 % Change % Change
<S> <C> <C> <C> <C> <C>
Class A Shares $5.15 $5.35 $5.16 + 6.02%(1) +2.25%(1)
Class B Shares 4.50 4.72 4.58 + 5.25(1) +2.13(1)
Class C Shares 4.50 4.72 4.59 + 5.02(1) +2.13(1)
Class D Shares 5.00 5.20 5.02 + 6.00(1) +2.33(1)
Class A Shares--Total Return +13.05(2) +9.04(2)
Class B Shares--Total Return +12.04(3) +8.72(3)
Class C Shares--Total Return +11.87(4) +8.79(4)
Class D Shares--Total Return +12.97(5) +9.06(5)
<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 $0.300 per share capital
gains distributions.
(2)Percent change includes reinvestment of $0.340 per share ordinary
income dividends and $0.300 per share capital gains distributions.
(3)Percent change includes reinvestment of $0.291 per share ordinary
income dividends and $0.300 per share capital gains distributions.
(4)Percent change includes reinvestment of $0.294 per share ordinary
income dividends and $0.300 per share capital gains distributions.
(5)Percent change includes reinvestment of $0.327 per share ordinary
income dividends and $0.300 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
1996 4.98 4.92 0.300 0.340 +11.91
1/1/97--1/31/97 4.92 5.15 -- -- + 4.67
------- ------
Total $11.782 Total $3.947
Cumulative total return as of 1/31/97: +346.10%**
<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.
</TABLE>
<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 -- -- - 3.50
1994 3.59 3.13 0.266 -- - 4.99
1995 3.13 4.43 0.097 0.099 +48.09
1996 4.43 4.30 0.300 0.291 +10.69
1/1/97--1/31/97 4.30 4.50 -- -- + 4.65
------ ------
Total $7.865 Total $3.259
<PAGE>
Cumulative total return as of 1/31/97: +150.59%**
<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
1996 4.43 4.30 0.300 0.294 +10.76
1/1/97--1/31/97 4.30 4.50 -- -- + 4.65
------ ------
Total $0.397 Total $0.393
Cumulative total return as of 1/31/97: +64.30%**
<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.
+++See Important Note on page 6.
</TABLE>
PERFORMANCE DATA (concluded)
<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
1996 4.85 4.78 0.300 0.327 +11.78
1/1/97--1/31/97 4.78 5.00 -- -- + 4.60
------ ------
Total $0.397 Total $0.426
Cumulative total return as of 1/31/97: +63.74%**
<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 3--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, L.P. became the sole
investment adviser.
</TABLE>
<TABLE>
Recent
Performance
Results*
<CAPTION>
12 Month 2/01/90 to 1/31/97++
%Change % Change
<S> <C> <C>
Class A Shares--Total Return +13.05%(1) +221.16%(2)
Class B Shares--Total Return +12.04(3) +206.06(4)
<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 $0.340 per share ordinary
income dividends and $0.300 per share capital gains distributions.
(2)Percent change includes reinvestment of $3.289 per share ordinary
income dividends and $5.618 per share capital gains distributions.
(3)Percent change includes reinvestment of $0.291 per share ordinary
income dividends and $0.300 per share capital gains distributions.
(4)Percent change includes reinvestment of $3.164 per share ordinary
income dividends and $5.618 per share capital gains distributions.
</TABLE>
Average Annual
Total Return
% Return Without % Return With
Sales Charge Sales Charge**
Class A Shares*
Year Ended 12/31/96 +11.91% + 6.03%
Five Years Ended 12/31/96 +10.81 + 9.62
2/01/90++ through 12/31/96 +17.59 +16.68
[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.
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 12/31/96 +10.69% + 6.80%
Five Years Ended 12/31/96 + 9.65 + 9.65
2/01/90++ through 12/31/96 +16.78 +16.78
<PAGE>
[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.
PORTFOLIO INFORMATION
Worldwide
Investments
As of 1/31/97
Ten Largest Holdings Percent of
Represented in the Portfolio Net Assets
Warner-Lambert Co. 7.3%
Bristol-Myers Squibb Co. 6.0
Lilly (Eli) & Co. 5.7
Baxter International, Inc. 4.2
Johnson & Johnson Co. 4.0
Becton Dickinson & Company 3.8
Hoechst AG 3.3
Cardinal Health, Inc. 3.3
Novartis AG (Registered) 3.0
Sepracor Inc. 2.8
Breakdown of Securities Percent of
By Country Net Assets
<PAGE>
United States 71.2%
Germany 9.0
Switzerland 5.3
United Kingdom 3.3
Finland 2.5
Israel 1.4
Japan 1.4
Sweden 0.8
Denmark 0.1
Industries Represented Percent of
In the Portfolio Net Assets
Medical Specialties 23.0%
Pharmaceutical--Prescription 23.4
Pharmaceutical--Consumer 21.8
Pharmaceutical--Diversified 10.9
Biotechnology 8.0
Health Care Cost Containment 6.6
Diagnostics 1.3
<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 Industries,
Diversified Inc. (ADR)* $ 3,858,750 $ 5,450,000 1.4%
Total Investments in the Middle East 3,858,750 5,450,000 1.4
NORTH
AMERICA
United Biotechnology 140,000 Amgen, Inc. 7,696,250 7,892,500 2.1
States 120,000 Aphton Corp. 2,662,063 2,595,000 0.7
50,000 Arris Pharmaceutical Corp. 744,063 662,500 0.2
100,000 Centocor, Inc. 3,204,851 3,812,500 1.0
200,000 Coulter Pharmaceuticals, Inc. 2,400,000 2,400,000 0.6
40,000 Creative BioMolecules, Inc. 421,876 405,000 0.1
205,000 Emisphere Technologies Inc. 2,596,506 4,766,250 1.2
20,000 Genzyme Corp. 624,688 557,500 0.1
425,000 Magainin Pharmaceuticals, Inc. 4,431,226 3,400,000 0.9
30,000 Neurex Corp. 501,876 416,250 0.1
30,000 Neurogen Corporation 577,500 585,000 0.1
30,000 Pharmacyclics Inc. 570,000 573,750 0.1
30,000 Protein Design Labs, Inc. 967,719 1,027,500 0.3
90,000 Vical, Inc. 1,582,500 1,406,250 0.4
65,000 Visible Genetics Inc. 544,375 503,750 0.1
------------ ------------ ------
29,525,493 31,003,750 8.0
Diagnostics 127,500 Dianon Systems, Inc. 1,246,878 1,434,375 0.4
75,000 Diatide, Inc. 637,500 496,875 0.1
147,000 NeoPath, Inc. 2,558,250 2,572,500 0.7
145,500 VOXEL 934,850 409,219 0.1
------------ ------------ ------
5,377,478 4,912,969 1.3
<PAGE>
Health Care Cost 150,000 Allegiance Corporation 2,939,942 3,843,750 1.0
Containment 200,000 Cardinal Health, Inc. 10,260,201 12,525,000 3.3
70,000 Healthcare Compare Corp. 3,109,969 2,975,000 0.8
15,500 McKesson Corporation 696,930 912,563 0.2
125,000 Medpartners, Inc. 2,748,130 2,328,125 0.6
100,000 Tenet Healthcare Corp. 2,177,660 2,700,000 0.7
------------ ------------ ------
21,932,832 25,284,438 6.6
Medical Specialties 350,000 Baxter International, Inc. 14,325,009 16,143,750 4.2
300,000 Becton Dickinson & Company 13,153,788 14,775,000 3.8
25,000 Boston Scientific Corp. 670,250 1,706,250 0.4
200,000 Conceptus Inc. 2,345,999 2,600,000 0.7
225,000 Endosonics Corp. 3,310,989 2,896,875 0.7
75,000 InControl, Inc. 1,071,875 543,750 0.1
165,000 KeraVision, Inc. 2,727,505 2,145,000 0.6
50,000 Medi-Ject Corporation 275,000 262,500 0.1
100,000 Medtronic, Inc. 3,644,813 6,850,000 1.8
35,000 Nellcor Puritan Bennett, Inc. 725,076 595,000 0.1
35,000 North American Vaccine Inc. 733,450 857,500 0.2
410,000 Optical Sensors, Inc. 4,727,813 3,843,750 1.0
75,000 Photoelectron Corp. 637,500 618,750 0.2
600,000 ReSound Corp. 6,292,805 3,900,000 1.0
50,000 Saint Jude Medical, Inc. 1,748,750 1,893,750 0.5
40,000 Stryker Corporation 1,245,000 1,160,000 0.3
25,000 Ultrafem Inc. 526,290 412,500 0.1
350,000 VISX, Incorporated 8,411,678 7,525,000 2.0
80,000 VidaMed, Inc. 1,037,501 980,000 0.3
------------ ------------ ------
67,611,091 69,709,375 18.1
Pharmaceutical-- 30,000 American Home Products Corporation 1,664,229 1,901,250 0.5
Consumer 180,000 Bristol-Myers Squibb Co. 19,746,251 22,860,000 6.0
270,000 Johnson & Johnson Co. 10,651,930 15,558,750 4.0
350,000 Warner-Lambert Co. 19,472,998 28,175,000 7.3
------------ ------------ ------
51,535,408 68,495,000 17.8
Pharmaceutical-- 214,400 Collagen Corporation 3,950,904 4,448,800 1.2
Diversified 50,000 Schering-Plough Corp. 3,377,615 3,781,250 1.0
------------ ------------ ------
7,328,519 8,230,050 2.2
Pharmaceutical-- 150,000 ALZA Corp. 3,867,120 4,331,250 1.1
Prescription 250,000 Lilly (Eli) & Co. 15,417,405 21,781,250 5.7
100,000 Merck & Co., Inc. 6,699,499 9,075,000 2.4
110,000 Pfizer, Inc. 7,539,887 10,216,250 2.7
28,200 Rhone-Poulenc Rorer Inc. 1,748,279 2,122,050 0.5
250,000 Sangstat Medical Corp. 8,267,502 7,656,250 2.0
410,000 Sepracor Inc. 10,498,670 10,813,750 2.8
------------ ------------ ------
54,038,362 65,995,800 17.2
<PAGE>
Total Investments in North America 237,349,183 273,631,382 71.2
PACIFIC
BASIN
Japan Pharmaceutical-- 50,000 Eisai Co. Ltd. 927,112 965,347 0.2
Diversified
Pharmaceutical-- 170,000 Sankyo Company, Ltd. 4,043,277 4,432,343 1.2
Prescription
Total Investments in the
Pacific Basin 4,970,389 5,397,690 1.4
WESTERN
EUROPE
Denmark Pharmaceutical-- 6,000 Novo Nordisk A/S (Class B) 460,157 556,987 0.1
Prescription
Investments in Denmark 460,157 556,987 0.1
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (concluded)
<CAPTION>
WESTERN
EUROPE Shares Percent of
(concluded) Industries Held Investments Cost Value Net Assets
<S> <S> <C> <S> <C> <C> <C>
Finland Medical Specialties 20,000 Instrumentarium Corp. (Group A) $ 595,141 $ 721,149 0.2%
Pharmaceutical-- 240,000 Orion-yhtymae OY (Class B) 7,352,403 8,781,627 2.3
Diversified
Investments in Finland 7,947,544 9,502,776 2.5
Germany Medical Specialties 40,000 Fresenius AG (Preferred) 6,773,477 8,033,207 2.1
333,609 Fresenius Medical Care AG (ADR)* 5,255,159 9,924,868 2.6
------------ ------------ ------
12,028,636 17,958,075 4.7
<PAGE>
Pharmaceutical-- 100,000 Bayer AG 3,411,012 3,796,850 1.0
Consumer
Pharmaceutical-- 300,000 Hoechst AG 10,423,951 12,599,194 3.3
Diversified
Investments in Germany 25,863,599 34,354,119 9.0
Sweden Pharmaceutical-- 70,000 Astra AB 'B' Free (Ordinary) 3,293,981 3,267,595 0.8
Prescription
Investments in Sweden 3,293,981 3,267,595 0.8
Switzerland Pharmaceutical-- 10,000 Novartis AG (Registered) (a) 11,340,593 11,447,646 3.0
Consumer
Pharmaceutical-- 1,000 Roche Holdings AG 7,664,483 8,780,745 2.3
Prescription
Investments in Switzerland 19,005,076 20,228,391 5.3
United Pharmaceutical-- 402,756 Smithkline Beecham Corporation
Kingdom Diversified PLC (ADR)* 4,511,794 5,760,342 1.5
Pharmaceutical-- 60,000 Glaxo Wellcome PLC 722,419 961,019 0.2
Prescription 185,000 Pliva d.d. 2,640,000 3,145,000 0.8
100,000 Zeneca Group PLC 2,156,035 2,891,711 0.8
------------ ------------ ------
5,518,454 6,997,730 1.8
Investments in the United Kingdom 10,030,248 12,758,072 3.3
Total Investments in Western Europe 66,600,605 80,667,940 21.0
<CAPTION>
SHORT-TERM Face
SECURITIES Amount
Commercial Paper** $2,477,000 Countrywide Home Loans, 5.34%
due 2/14/1997 2,472,224 2,472,224 0.6
US Government & 5,000,000 Federal Home Loan Bank, 5.32%
Agency Obligations** due 2/03/1997 4,998,522 4,998,522 1.3
5,000,000 Federal Home Loan Mortgage Corp.,
5.21% due 2/07/1997 4,995,658 4,995,658 1.3
------------ ------------ ------
9,994,180 9,994,180 2.6
<PAGE>
Total Investments in Short-Term
Securities 12,466,404 12,466,404 3.2
Total Investments $325,245,331 377,613,416 98.2
============
Other Assets Less Liabilities 6,915,815 1.8
------------ ------
Net Assets $384,529,231 100.0%
============ ======
Net Asset Value: Class A--Based on net assets of $137,348,572
and 26,648,934 shares outstanding $ 5.15
============
Class B--Based on net assets of $204,194,144
and 45,357,550 shares outstanding $ 4.50
============
Class C--Based on net assets of $21,733,190
and 4,828,537 shares outstanding $ 4.50
============
Class D--Based on net assets of $21,253,325
and 4,252,745 shares outstanding $ 5.00
============
<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.
(a)Formerly Sandoz AG (Registered).
</TABLE>
PORTFOLIO CHANGES
For the Quarter Ended January 31, 1997
Additions
<PAGE>
ALZA Corp.
*Aetna, Inc.
Amgen, Inc.
Arris Pharmaceutical Corp.
Coulter Pharmaceuticals, Inc.
Creative BioMolecules, Inc.
Dianon Systems, Inc.
*IDEC Pharmaceuticals Corp.
*Matrix Pharmaceutical, Inc.
Medpartners, Inc.
Nellcor Puritan Bennett, Inc.
Neurex Corp.
Neurogen Corporation
Photoelectron Corp.
Pliva d.d.
Protein Design Labs, Inc.
Sangstat Medical Corp.
Sepracor Inc.
Stryker Corporation
Tenet Healthcare Corp.
Ultrafem Inc.
VOXEL
Vical, Inc.
VidaMed, Inc.
Visible Genetics Inc.
Deletions
*Aetna, Inc.
BASF AG
Bergen Brunswig Corp.
Ciba-Geigy AG (Registered)
Daiichi Pharmaceutical Co., Ltd.
Epitope Inc.
Forest Laboratories, Inc.
Foundation Health Corp.
HEALTHSOUTH Corp.
*IDEC Pharmaceuticals Corp.
Integra Lifesciences Corp.
*Matrix Pharmaceutical, Inc.
Sanofi S.A.
Takeda Chemical Industries, Ltd.
Transkaryotic Therapies, Inc.
Walsh International, Inc.
[FN]
*Added and deleted in the same quarter.
