MERRILL LYNCH
BALANCED FUND
For Investment and
Retirement
FUND LOGO
Quarterly Report
December 31, 1994
This report is not authorized for use as an offer of sale or a
solicitation of an offer to buy shares of the Fund unless
accompanied or preceded by the Fund'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.
Merrill Lynch
Retirement Benefit
Investment Program, Inc.
Full Investment Portfolio
d/b/a Merrill Lynch
Balanced Fund for
Investment and
Retirement
Box 9011
Princeton, NJ
08543-9011
<PAGE>
Merrill Lynch Balanced Fund for Investment and Retirement
PORTFOLIO SUMMARY
Security Diversification
As of December 31, 1994
A pie chart illustrating the following percentages:
US Stocks 49.0%
International Stocks 9.6%
US Bonds 29.0%
International Bonds 8.4%
Cash 4.0%
Sector Allocation
As of December 31, 1994
A pie chart illustrating the following percentages:
Capital Spending 32.6%
Energy 8.3%
Transports 1.7%
Basic Industry 9.9%
Credit Sensitive &
Financial Services 7.4%
Utilities 11.4%
Consumer Cylcicals 11.1%
Consumer Staples 17.6%
US Domiciled Common Stock S&P
Investments Fund 500*
After Tax Profit Margin 8.7% 7.1%
Yield 1.9% 2.7%
Price/Earnings Ratio** 18.0 17.0
Return on Equity 14.9% 15.4%
Average Capitalization (in billions) $9.4 $6.6
Earnings Growth Rate (5 yr. average) 23.0% 8.0%
[FN]
*An unmanaged broad-based index comprised of common stocks.
**Based on 1994 earnings estimates.
<PAGE>
Merrill Lynch
Fixed-Income Investments Fund BOAO Index*
Duration 5.3 Years 5.1 Years
Average Maturity 9.8 Years 9.1 Years
Asset Breakdown:
US Treasuries/Agencies 67.6% 76.6%
Corporates 9.9% 23.4%
International Governments 22.5% --
[FN]
*An unmanaged market-weighted corporate and Government master bond
index reflecting approximately 97% of total outstanding US bonds.
Percent of
Currency Diversification Net Assets
US Dollar 81.9%
Australian Dollar 4.0
German Mark 3.6
UK Sterling 2.3
Hong Kong Dollar 1.4
Japanese Yen 1.1
Mexican Peso 1.1
Chilean Peso 1.0
Italian Lira 0.9
Swedish Krona 0.7
Canadian Dollar 0.6
French Franc 0.4
Norwegian Krone 0.4
Danish Krone 0.3
Netherlands Guilder 0.3
Indonesian Rupiah 0.0
Percent of US Equities vs. S&P
S&P 500 Index Fund vs. 500*
Basic Industry 9.9% 7.6%
Capital Spending 32.6 19.7
Conglomerates 0.0 1.3
Consumer Cyclicals 11.1 9.6
Consumer Staples 17.6 26.8
Credit-Sensitive & Financial Services 7.4 10.9
Energy 8.3 10.6
Transports 1.7 1.6
Utilities 11.4 11.8
[FN]
*An unmanaged broad-based index comprised of common stocks.
<PAGE>
DEAR SHAREHOLDER
During the December quarter, the Fund's asset mix shifted to favor
bonds which increased to 37.5% of net assets from 32.4%, at the
expense of cash equivalents which declined from 8.5% to 4.0%.
Equities remained little changed at 58.9% of net assets compared
with 59.0% at the beginning of the quarter.
During the three-month period ended December 31, 1994, two major
news items influenced US securities prices. First there was the loud
message voters sent to incumbent Congressmen regarding their
priorities. The second development was the devaluation and
subsequent float of the Mexican peso, which weakened all Latin
American equity and bond markets. As the 104th Congress convenes,
Congressmen on both sides of the aisle are scrambling to prepare
legislation to introduce in early 1995 which will mandate a balanced
budget, institute a line item veto for the President on spending
bills, overhaul the tax system to include a reduction in the capital
gains tax rate, systematically reduce or in some cases eliminate
portions of the "entitlements" programs, and "one up" the President
who proposed cutting the budget deficit by $60 billion.
During the past few months, the Federal Reserve Board raised the
Federal Funds rate for a sixth time during 1994 to slow the gross
domestic product (GDP) growth rate to less than 3% (which it seems
to believe would eliminate the risk of inflation), while the GDP
growth rate for the third quarter was 4% and estimates of fourth
quarter GDP range upward toward 5%. Rising interest rates in the
United States and elsewhere are creating stress in equity markets
around the world and forcing the economies whose currencies are tied
to the US dollar to pay higher interest rates.
<PAGE>
This attempt to slow our economy has resulted in a few reductions in
estimated profit gains for late 1994 and 1995 despite consumer
confidence which suggest continued growth. Disagreement among
Federal Open Market Committee members regarding the need to push
short-term interest rates still higher, and the unsettling impact
the Orange County, California bankruptcy filing had on the bond
market kept the Federal Reserve Board from raising short-term
interest rates a seventh time in December and recently enabled bond
investments to achieve the first solid performance since October
1993. The Mexican currency turmoil could discourage the Federal
Reserve Board from aggressively raising short-term interest rates in
the short run. It seems possible the bond market rally during the
fourth quarter was in part because of a belief that reduced bond
market speculation in the future will cut bond price volatility. In
addition, the premium built into yield levels would compensate for
that volatility. If so, bond yields could seek lower levels without
an improved inflation outlook, if only temporarily. Longer term, we
expect the simultaneous expansion of developed and developing
economies around the world to raise the global demand for capital
and keep interest rates higher than normal while major population
centers including China, India and Indonesia assimilate their more
than two billion inhabitants into the global economy.
Investment Strategy
The numerous prospective battles looming for Congress, many of which
importantly influence the outlook for the securities markets,
suggest this is a good time to exercise caution since it is widely
recognized that investors do not like uncertainty. Accordingly, we
reduced participation in some economically sensitive areas,
particularly those which are unlikely to benefit greatly from
accelerating growth outside the United States. Investment groups
with more defensive properties, including consumer nondurables,
energy and communications utilities, now have a greater impact on
the portfolio. In the fixed-income sector, we added to our position
in an effort to participate more fully in the expected near-term
strength.
The average duration was extended beyond the unmanaged Merrill Lynch
BOAO Index by purchasing zero coupon agencies. After November 30,
1994, we redirected assets away from Mexico prior to the devaluation
and subsequent float of the new peso. We used the proceeds to add to
our Australian dollar and German Deutschemark positions.
Among non-US equities, we closed our positions in Argentina, and
reduced the Mexican holdings slightly prior to the Mexican currency
devaluation and float in favor of slightly greater participation in
Japan and the Netherlands.
<PAGE>
Investment Outlook
It seems likely the Federal Reserve Board will successfully slow the
domestic economy this year, probably following further Federal Funds
rate increases. Higher short-term interest rates would likely
truncate any further bond market strength. Since we are late in the
US economic cycle and world growth is accelerating, we will probably
view strength in bond prices as an opportunity to reduce the
allocation to bonds. Since we expect the US dollar to regain some of
the ground lost during 1994 in the foreign exchange market, assets
are likely to shift back toward US obligations.
In the short run, we may reduce equities as a percent of the total
portfolio. Assuming more favorable legislation regarding capital
gains and corporate taxes, we may seek an opportunity to assume a
slightly less defensive posture later in the year. Since higher
worldwide interest rates will probably slow economic growth globally
over time, we are likely to become more selective in our non-US
equity purchases and may further reduce emerging market
participation.
In Conclusion
We thank you for your continued investment in Merrill Lynch Balanced
Fund for Investment and Retirement, and we look forward to
continuing to serve your financial needs in 1995 and beyond.
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
(Denis B. Cummings)
Denis B. Cummings
Vice President and Portfolio Manager
January 31, 1995
<PAGE>
OFFICERS AND DIRECTORS
Arthur Zeikel, President and Director
Kenneth S. Axelson, Director
Herbert I. London, Director
Robert R. Martin, Director
Joseph L. May, Director
Andre F. Perold, Director
Terry K. Glenn, Executive Vice President
Bernard J. Durnin, Senior Vice President
Donald C. Burke, Vice President
Denis B. Cummings, Vice President and
Portfolio Manager
Gerald M. Richard, Treasurer
Jerry Weiss, Secretary
Custodian
The Chase Manhattan Bank, N.A.
4 Chase MetroTech Center, 18th Floor
Brooklyn, New York 11245
Transfer Agent
Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, Florida 32246-6484
(800) 637-3863
PERFORMANCE DATA
About Fund Performance
Since October 21, 1994, investors have been able to purchase shares
of the Fund through the Merrill Lynch Select Pricing SM System,
which offers four pricing alternatives:
* Class A Shares incur a maximum initial sales charge (front-end
load) of 5.25% and bear no ongoing distribution or account
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 8 years.
<PAGE>
* 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).
Performance data for the Fund's Class A and Class B Shares are
presented in the "Performance Summary" and "Average Annual Total
Return" tables on page 5. "Aggregate Total Return" tables for Class
C and Class D Shares are also presented on page 5. Data for all of
the Fund's shares, including Class C and Class D Shares, are
presented in the "Recent Performance Results" table.
The "Recent Performance Results" table below shows investment
results before the deduction of any sales charges for Class A and
Class B Shares for the 12-month and 3-month periods ended December
31, 1994 and for Class C and Class D Shares for the period since
inception through December 31, 1994. All data in this table assume
imposition of the actual total expenses incurred by each class of
shares during the relevant period.
None of the past results shown should be considered a representation
of future performance. Investment return and principal value of
shares will fluctuate so that shares, when redeemed, may be worth
more or less than their original cost. Dividends paid to each class
of shares will vary because of the different levels of account
maintenance, distribution and transfer agency fees applicable to
each class, which are deducted from the income available to be paid
to shareholders.
<TABLE>
Recent Performance Results
<CAPTION>
12 Month 3 Month
12/31/94 9/30/94++ 12/31/93 % Change % Change++
<S> <C> <C> <C> <C> <C>
ML Balanced Fund Class A Shares* $10.19 $11.67 $12.33 -10.15%(1) -5.07%(1)
ML Balanced Fund Class B Shares* 10.37 11.75 12.44 - 9.50(1) -4.19(1)
ML Balanced Fund Class C Shares* 10.27 11.74 -- -- -4.96(1)
ML Balanced Fund Class D Shares* 10.18 11.66 -- -- -5.07(1)
ML Balanced Fund Class A Shares--Total Return* - 6.55(2) -2.79(3)
ML Balanced Fund Class B Shares--Total Return* - 7.38(4) -2.91(5)
ML Balanced Fund Class C Shares--Total Return* -- -2.86(6)
ML Balanced Fund Class D Shares--Total Return* -- -2.82(7)
S&P 500/ML BOAO Blended Index--Total Return** - 0.99 +0.21
<PAGE>
<FN>
*Investment results shown do not reflect sales charges; results
shown would be lower if a sales charge was included.
**An unmanaged broad-based index comprised of corporate bonds,
government bonds and common stocks. Total investment returns for
unmanaged indexes are based on estimates.
++Investment results for Class C and Class D Shares are since
inception (10/21/94).
(1)Percent change includes reinvestment of $0.885 per share capital
gains distributions.
(2)Percent change includes reinvestment of $0.441 per share ordinary
income dividends and $0.885 per share capital gains distributions.
(3)Percent change includes reinvestment of $0.265 per share ordinary
income dividends and $0.885 per share capital gains distributions.
(4)Percent change includes reinvestment of $0.262 per share ordinary
income dividends and $0.885 per share capital gains distributions.
(5)Percent change includes reinvestment of $0.149 per share ordinary
income dividends and $0.885 per share capital gains distributions.
(6)Percent change includes reinvestment of $0.246 per share ordinary
income dividends and $0.885 per share capital gains distributions.
(7)Percent change includes reinvestment of $0.262 per share ordinary
income dividends and $0.885 per share capital gains distributions.
</TABLE>
PERFORMANCE DATA (concluded)
<TABLE>
Performance Summary--Class A Shares
<CAPTION>
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<C> <C> <C> <C> <C> <C>
10/27/88--12/31/88 $11.18 $10.78 $0.008 $0.364 + 0.23%
1989 10.78 11.93 -- 0.767 +18.12
1990 11.93 10.57 0.377 0.719 - 2.31
1991 10.57 12.85 -- 0.457 +26.40
1992 12.85 12.08 0.745 0.546 + 4.16
1993 12.08 12.33 1.013 0.604 +15.93
1994 12.33 10.19 0.885 0.441 - 6.55
------ ------
Total $3.028 Total $3.898
Cumulative total return as of 12/31/94: +64.21%**
<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>
<PAGE>
<TABLE>
Performance Summary--Class B Shares
<CAPTION>
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<C> <C> <C> <C> <C> <C>
11/29/85--12/31/85 $10.00 $10.19 -- -- + 1.90%
1986 10.19 11.03 $0.280 $0.250 +13.53
1987 11.03 10.52 0.222 0.496 + 1.75
1988 10.52 10.78 0.008 0.582 + 8.14
1989 10.78 11.95 -- 0.634 +17.01
1990 11.95 10.64 0.377 0.547 - 3.30
1991 10.64 12.93 -- 0.329 +24.96
1992 12.93 12.18 0.745 0.409 + 3.19
1993 12.18 12.44 1.013 0.467 +14.67
1994 12.44 10.37 0.885 0.262 - 7.38
------ ------
Total $3.530 Total $3.976
Cumulative total return as of 12/31/94: +97.25%**
<FN>
*Figures may include short-term capital gains distributions.
**Figures assume reinvestment of all 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>
Average Annual Total Return
% Return Without % Return With
Sales Charge Sales Charge**
Class A Shares*
Year Ended 12/31/94 -6.55% -11.46%
Five Years Ended 12/31/94 +6.86 +5.71
Inception (10/27/88)
through 12/31/94 +8.36 +7.41
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
<PAGE>
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 12/31/94 -7.38% -10.72%
Five Years Ended 12/31/94 +5.78 +5.78
Inception (11/29/85) through 12/31/94 +7.76 +7.76
[FN]
*Maximum contingent deferred sales charge is 4% and is reduced to 0%
after 4 years.
**Assuming payment of applicable contingent deferred sales charge.
Aggregate Total Return
% Return % Return
Without CDSC With CDSC**
Class C Shares*
Inception (10/21/94)
through 12/31/94 -2.86% -3.73%
[FN]
*Maximum contingent deferred sales charge is 1% and is reduced to 0%
after one year.
**Assuming payment of applicable contingent deferred sales charge.
% Return Without % Return With
Sales Charge Sales Charge**
Class D Shares*
Inception (10/21/94)
through 12/31/94 -2.82% -7.92%
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS
<CAPTION>
Shares Percent of
Industries Held Corporate Bonds Cost Value Net Assets
<S> <C> <S> <C> <C> <C>
Financial $ 10,000,000 Ford Capital BV, 9.375% due 1/01/1998 $ 10,037,900 $ 10,271,300 1.5%
Services 5,000,000 Landeskreditbank, N.V., 7.875% due
4/15/2004 4,972,068 4,884,100 0.7
Financial Services-- 10,000,000 American General Financial Corp.,
Consumer 7.38% due 5/13/1997 9,993,200 9,816,700 1.5
Total Investments in Corporate Bonds 25,003,168 24,972,100 3.7
<CAPTION>
Country Foreign Government & Agency Obligations
<S> <C> <S> <C> <C> <C>
Italy 5,000,000 Republic of Italy, 8.75% due 2/08/2001 5,373,050 5,021,880 0.7
Total Investments in Foreign Government
& Agency Obligations 5,373,050 5,021,880 0.7
<CAPTION>
US Government & Agency Obligations
<S> <C> <S> <C> <C> <C>
United States 4,910,000 Federal Home Loan Mortgage Corp.,
REMIC (a), 1243-HP, 5.625% due 11/25/2015 4,788,017 4,400,588 0.6
Federal National Mortgage Association:
10,000,000 8.00% due 1/01/2020 9,548,438 9,548,438 1.4
10,230,724 7.00% due 5/01/2024 9,434,646 9,284,382 1.4
Government National Mortgage Association:
12,691,418 7.50% due 6/15/2024 12,124,270 11,775,262 1.7
6,853,462 7.50% due 7/15/2024 6,547,198 6,358,732 0.9
US Treasury Notes:
55,000,000 7.875% due 8/15/2001 53,943,600 55,111,650 8.1
25,000,000 6.25% due 2/15/2003 25,710,938 22,609,250 3.3
35,000,000 5.75% due 8/15/2003 36,432,813 30,417,100 4.4
US Treasury STRIPS++ (b):
22,000,000 4.79% due 5/15/2000 16,276,649 14,608,220 2.1
20,000,000 4.79% due 11/15/2004 9,323,447 9,282,200 1.4
Total Investments in US Government &
Agency Obligations 184,130,016 173,395,822 25.3
<PAGE>
<CAPTION>
Foreign Obligations
<S> <S> <C> <S> <C> <C> <C>
Australia A$ 23,000,000 Queensland Treasury Corp., 8.00% due
5/14/1997 16,903,799 17,029,586 2.5
3,100,000 Queensland Treasury Corp., Global, 8.00%
due 7/14/1999 2,328,332 2,208,660 0.3
Germany DM 22,000,000 Bundes, 6.375% due 5/20/1998 13,923,234 13,914,346 2.1
17,000,000 Deutschland Republic, 8.00% due 7/22/2002 11,145,767 11,180,685 1.6
United UK Treasury Gilt:
Kingdom Pound 1,350,000 8.75% due 9/01/1997 2,267,919 2,131,277 0.3
Sterling 4,000,000 8.00% due 6/10/2003 6,698,788 5,972,336 0.9
Total Investments in Foreign Obligations 53,267,839 52,436,890 7.7
Total Investments in Corporate Bonds,
Foreign Government & Agency Obligations,
US Government & Agency Obligations &
Foreign Obligations 267,774,073 255,826,692 37.4
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued)
<CAPTION>
Shares Percent of
Industries Held US Stocks Cost Value Net Assets
<S> <C> <S> <C> <C> <C>
Basic Industry
Aluminum 35,000 Aluminum Co. of America (ALCOA) $ 2,973,991 $ 3,031,875 0.4%
Chemicals 110,000 du Pont (E.I.) de Nemours & Co. 6,362,863 6,187,500 0.9
180,000 Eastman Chemical Co. 9,257,123 9,090,000 1.3
120,000 IMC Fertilizer Group, Inc. 4,987,939 5,190,000 0.8
90,000 Rohm & Haas Co. 4,872,761 5,141,250 0.8
Packaging 125,000 Crown Cork & Seal Co., Inc. 3,731,987 4,718,750 0.7
Total Basic Industry 32,186,664 33,359,375 4.9
<PAGE>
Capital Spending
Auto & Truck 145,000 Consorcio G Grupo Dina, S.A. de
C.V. (ADR) (c)(1) 2,313,515 1,377,500 0.3
Communication 255,000 ADC Telecommunications, Inc. 8,983,466 12,622,500 1.8
Equipment 200,000 DSC Communications Corp. 5,130,692 7,200,000 1.1
60,000 Motorola, Inc. 2,956,553 3,472,500 0.5
90,000 Tellabs, Inc. 1,946,804 4,995,000 0.7
Computer Services 435,000 Computer Sciences Corp. 12,921,698 22,185,000 3.2
60,000 General Motors Corp. (Class E) 2,355,744 2,310,000 0.3
Electrical Equipment 150,000 Siebe PLC (1) 1,309,386 1,306,044 0.2
180,000 W.W. Grainger 10,931,138 10,395,000 1.5
Electronics 210,000 Solectron Corp. 5,168,718 5,775,000 0.8
Engineering & 230,000 Empresas ICA Sociedad Controladora,
Construction S.A. de C.V. (ADR) (c) (1) 4,526,225 3,565,000 0.5
410,000 Huntington International Holdings
PLC (ADR)(c)(1) 9,996,548 1,076,250 0.2
Environmental Control 1,100,000 Wheelabrator Technologies, Inc. 12,362,975 16,225,000 2.4
Multi--Industry 60,000 Allied-Signal Inc. 2,184,115 2,040,000 0.3
Office Equipment 610,000 Danka Business Systems PLC (ADR)
(c) (1) 9,489,019 13,038,750 1.9
25,000 International Business Machines Corp. 1,775,905 1,837,500 0.3
Total Capital Spending 94,352,501 109,421,044 16.0
Consumer Cyclicals
Appliances 675,000 Singer Co. N.V. (ADR) (c) (1) 17,730,688 20,165,625 2.9
474,500 Sunbeam-Oster Inc. 9,420,127 12,218,375 1.8
<PAGE>
Retail 75,000 Phillips-Van Heusen Corp. 1,721,463 1,143,750 0.2
Tires & Rubber 150,000 Cooper Tire & Rubber Co. 3,628,791 3,543,750 0.5
Total Consumer Cyclicals 32,501,069 37,071,500 5.4
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued)
<CAPTION>
Shares Percent of
Industries Held US Stocks Cost Value Net Assets
<S> <C> <S> <C> <C> <C>
Consumer Staples
Beverages 20,000 PanAmerican Beverage Inc. (ADR)
(c) (1) $ 635,958 $ 632,500 0.1%
Consumer-- 90,000 Duracell International Inc. 3,713,033 3,903,750 0.6
Miscellaneous
Consumer--Services 180,000 Block (H & R), Inc. 7,774,923 6,682,500 1.0
Drug Stores 40,000 Revco D.S., Inc. 926,552 945,000 0.1
Drug/Pharmaceuticals 55,000 American Home Products Corp. 3,429,902 3,451,250 0.5
Drugs & Hospital Supply 255,000 Merck & Co., Inc. 9,276,506 9,721,875 1.4
Healthcare 450,000 Humana Inc. 8,419,745 10,181,250 1.5
210,000 Physician Corp. of America 4,417,467 4,252,500 0.6
Household Products 240,000 Procter & Gamble Co. 13,503,704 14,880,000 2.2
Photography 90,000 Eastman Kodak Co. 4,461,293 4,297,500 0.6
Total Consumer Staples 56,559,083 58,948,125 8.6
<PAGE>
Credit-Sensitive & Financial Services
Banking 165,000 BankAmerica Corp. 7,440,617 6,517,500 1.0
200,000 Bank of New York Co. 5,581,161 5,800,000 0.9
270,000 Espirito Santo Financial Holdings S.A.
(ADR) (c) (1) 3,798,181 3,611,250 0.5
130,000 Grupo Financiero Serfin S.A. (ADR)
(c) (1) 3,204,369 975,000 0.1
Insurance 87,500 International Telephone & Telegraph Corp. 7,493,013 7,754,687 1.1
Total Credit-Sensitive & Financial
Services 27,517,341 24,658,437 3.6
Energy
Energy--Related 350,000 California Energy Co., Inc. 6,244,403 5,468,750 0.8
Oil--Integrated 125,000 Mobil Oil Corp. 9,757,153 10,531,250 1.5
120,000 Phillips Petroleum Co. 4,082,924 3,930,000 0.6
75,000 Royal Dutch Petroleum Co. N.V. (ADR)
(c) (1) 6,692,188 8,062,500 1.2
Total Energy 26,776,668 27,992,500 4.1
Transports
Railroads 310,000 Southern Pacific Rail Co. 6,386,644 5,618,750 0.8
Total Transports 6,386,644 5,618,750 0.8
Utilities
Utilities-- 49,100 ALC Communications Corp. 1,456,673 1,528,237 0.2
Communications 180,000 GTE Corp. 5,790,102 5,467,500 0.8
515,750 LDDS Communications Inc. (Class A) 11,447,075 9,992,656 1.5
330,000 MCI Communications Corp. 9,481,959 6,063,750 0.9
170,000 Southwestern Bell Corp. 7,282,605 6,863,750 1.0
200,000 Telefonos de Mexico, S.A. de C.V.
(ADR) (c) (1) 9,342,788 8,200,000 1.2
Total Utilities 44,801,202 38,115,893 5.6
Total Investments in US Stocks 321,081,172 335,185,624 49.0
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued)
<CAPTION>
Shares Percent of
Industries Held Foreign Stocks Cost Value Net Assets
<S> <C> <S> <C> <C> <C>
Australia
Banking 347,492 National Australia Bank Ltd. $ 2,199,488 $ 2,779,958 0.4%
Media/Publishing 160,000 News Corp. Ltd. (New) (ADR) (c) 2,193,768 2,500,000 0.4
80,000 News Corp. Ltd. (Ordinary) (ADR) (c) 1,885,269 1,110,000 0.2
Multi--Industry 9,399 Pacific Dunlop, Ltd. 27,135 24,991 0.0
Retail 425,250 Coles Myer Ltd. 1,813,741 1,443,884 0.2
Canada
Appliances 280,000 Semi-Tech Corp. (d) 2,947,648 1,097,961 0.2
Chemicals 135,000 NOVA Corp. (Class A) 1,418,715 1,248,750 0.2
Retail Stores 75,000 Hudson's Bay Company (Ordinary) 2,011,842 1,336,803 0.2
Chile
Banking 57,000 Banco O'Higgins (ADR) (c) 837,114 976,125 0.1
Packaging 40,000 Christalerias de Chile S.A. (ADR) (c) 761,587 630,000 0.1
Utilities-- 33,800 Empresas Telex-Chile S.A. 666,017 359,125 0.1
Communications
Utilities--Electric 96,600 Distribuidora Chilectra Metropolitana
S.A. (ADR) (c) 2,696,793 4,733,400 0.7
<PAGE>
Denmark
Utilities-- 80,000 Tele Danmark A/S (ADR) (c) 1,882,080 2,040,000 0.3
Communications
France
Metals--Non-Ferrous 21,100 Eramet 1,385,457 1,365,248 0.2
Utilities--Water 15,413 Compagnie Generale des Eaux 1,445,264 1,500,253 0.2
Hong Kong
Banking 286,378 HSBC Holdings PLC 1,750,973 3,091,076 0.4
Electrical Equipment 1,300,000 Johnson Electric Co. 2,603,189 2,982,808 0.4
Multi--Industry 660,000 Hutchison Whampoa, Ltd. 1,685,630 2,670,372 0.4
Oil/Gas 2,000,000 Shanghai Petrochemical Co., Ltd. 668,375 568,769 0.1
Indonesia
Telecommunications 3,160 P.T. Indonesia Satellite (ADR) (c) 101,278 112,970 0.0
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued)
<CAPTION>
Shares Percent of
Industries Held Foreign Stocks Cost Value Net Assets
<S> <C> <S> <C> <C> <C>
Italy
Banking 90,000 Istituto Mobilare (ADR) (c) $ 1,976,579 $ 1,653,750 0.2%
<PAGE>
Japan
Electronics 45,000 Fujitsu, Ltd. 495,657 456,784 0.1
100,000 Hitachi, Ltd. 995,078 993,970 0.2
15,000 Kyocera Corp. 1,111,721 1,114,070 0.2
270,000 Mitsubishi Electric Corp. 1,854,078 1,918,492 0.3
25,000 TDK Corp. 1,179,445 1,213,568 0.2
Semiconductors 40,000 NEC Corp. 513,178 458,291 0.1
Mexico
Multi--Industry 433,800 Grupo Carso, S.A. de C.V. (ADR) (c) 3,832,850 6,561,225 0.9
Retail Stores 430,000 CIFRA, S.A. de C.V. 'C' 1,129,713 831,918 0.1
Netherlands
Foods/Food 18,000 Unilever Capital Corp. (ADR) (c) 2,088,261 2,097,000 0.3
Processing
Norway
Energy Related 75,000 Norsk Hydro A.S. (ADR) (c) 2,884,119 2,934,375 0.4
Sweden
Appliances 12,000 Electrolux AB 'B' Free 610,647 610,049 0.1
Telecommunications 80,000 Ericsson (LM) Telephone Co. 4,590,490 4,410,000 0.6
United Kingdom
Financial Services 100,000 Reuters Holding PLC (ADR) (c) 2,571,186 4,387,500 0.6
Multi--Industry 50,000 Hanson PLC Sponsored (ADR) (c) 1,106,687 900,000 0.l
<PAGE>
Oil--Integrated 35,000 British Petroleum Co. PLC (ADR) (c) 2,578,349 2,795,625 0.4
Total Investments in Foreign Stocks 60,499,401 65,909,110 9.6
Total Investments in US & Foreign
Stocks 381,580,573 401,094,734 58.6
<CAPTION>
Face
Amount* Short-Term Securities
<S> <C> <S> <C> <C> <C>
Commercial Paper** $20,000,000 Ciesco L.P., 5.95% due 1/10/1995 19,966,945 19,966,945 2.9
4,603,000 General Electric Capital Corp., 5.80%
due 1/03/1995 4,600,775 4,600,775 0.6
Total Investments in Short-Term
Securities 24,567,720 24,567,720 3.5
Total Investments 673,922,366 681,489,146 99.5
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (concluded)
<CAPTION>
Number of Premiums Percent of
Shares Issue Received Value Net Assets
<S> <C> <S> <C> <C> <C>
Options Written
Call Options Written 6,300 ADC Telecommunications Inc.,
expiring January 1995 at US $50 $ (7,949) $ (7,088) 0.0%
15,500 ITT Corp., expiring January 1995 at
US $90 (18,748) (17,437) 0.0
Total Options Written (26,697) (24,525) 0.0
Total Investments, Net of Options Written $673,895,669 681,464,621 99.5
============
Other Assets Less Liabilities 3,355,691 0.5
------------ ------
Net Assets $684,820,312 100.0%
============ ======
<PAGE>
Net Asset Value: Class A--Based on net assets of $37,041,579 and
3,633,601 shares outstanding $ 10.19
============
Class B--Based on net assets of $299,637,972 and
28,902,672 shares outstanding $ 10.37
============
Class C--Based on net assets of $209,734 and 20,420
shares outstanding $ 10.27
============
Class D--Based on net assets of $347,931,027 and
34,162,431 shares outstanding $ 10.18
============
<FN>
(a)Real Estate Mortgage Investment Conduits (REMIC).
(b)Represents the yield-to-maturity on this zero coupon issue. These
securities are purchased at a deep discount and amortized to
maturity.
(c)American Depositary Receipt (ADR).
(d)Formerly named International Semi-Tech Corp.
*Denominated in US dollars unless otherwise indicated.
**Commercial Paper is traded on a discount basis; the interest rates
shown are the discount rates paid at the time of purchase by the
Fund.
(1)Consistent with the general policy of the Securities and Exchange
Commission, the nationality or domicile of an issuer for
determination of foreign issuer status may be (i) the country under
whose laws the issuer is organized, (ii) the country in which the
issuer's securities are principally traded, or (iii) the country in
which the issuer derives a significant proportion (at least 50%) of
its revenue or profits from goods produced or sold, investments
made, or services performed in the country, or in which at least 50%
of the assets of the issuer are situated.
++Separate Trading of Registered Interest and Principal of
Securities (STRIPS).
</TABLE>
<PAGE>
PORTFOLIO INFORMATION
Ten Largest Equity Holdings Percent of
As of December 31, 1994 Net Assets
Computer Sciences Corp. 3.2%
Singer Co. N.V. (ADR) 2.9
Wheelabrator Technologies, Inc. 2.4
Procter & Gamble Co. 2.2
Danka Business Systems PLC (ADR) 1.9
ADC Telecommunications, Inc. 1.8
Sunbeam-Oster Inc. 1.8
Mobil Oil Corp. 1.5
W.W. Grainger 1.5
Humana Inc. 1.5
