MERRILL LYNCH
BALANCED FUND
For Investment and
Retirement
FUND LOGO
Semi-Annual Report
March 31, 1995
This report is not authorized for use as an offer of sale or a
solicitation of an offer to buy shares of the 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.
<PAGE>
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
Merrill Lynch Balanced Fund for Investment and Retirement
PORTFOLIO SUMMARY
Pie graph depicting Security Diversification as of March 31, 1995
US Stocks--44.8%
International Stocks--7.2%
US Bonds--30.0%
International Bonds--9.4%
Cash--8.6%
<PAGE>
Pie graph depicting Sector Allocation As of March 31, 1995
Capital Spending--29.4%
Energy--8.3%
Transports--2.4%
Basic Industry--4.4%
Credit-Sensitive & Financial Services--16.0%
Utilities--9.8%
Consumer Cyclicals--9.3%
Consumer Staples--20.4%
US Domiciled Common Stock S&P
Investments Fund 500*
After-Tax Profit Margin 6.4% 6.8%
Yield 2.0% 2.5%
Price/Earnings Ratio** 15.0 15.0
Return on Equity 16.2% 16.4%
Average Capitalization (in billions) $11.0 $7.3
Earnings Growth Rate (5 yr. average) 22.0% 8.0%
[FN]
*An unmanaged broad-based index comprised of common stocks.
**Based on 1995 earnings estimates.
Merrill Lynch
Fixed-Income Investments Fund B0A0 Index*
Duration 5.6 Years 5.3 Years
Average Maturity 9.6 Years 9.2 Years
Asset Breakdown:
US Treasuries/Agencies 66.2% 76.9%
Corporates 9.9% 23.1%
International Governments 23.9% --
[FN]
*An unmanaged market-weighted corporate and Government master bond
index reflecting approximately 97% of total outstanding US bonds.
<PAGE>
Percent of
Currency Diversification Net Assets
US Dollar 84.9%
German Mark 8.6
Australian Dollar 2.0
Chilean Peso 1.1
Hong Kong Dollar 1.1
Mexican Peso 0.7
Canadian Dollar 0.5
Danish Krone 0.5
French Franc 0.4
Swedish Krona 0.1
UK Sterling 0.1
Indonesian Rupiah 0.0
Percent of US Equities vs. S&P
S&P 500 Index Fund vs. 500*
Basic Industry 4.4% 7.5%
Capital Spending 29.4 20.1
Conglomerates 0.0 1.4
Consumer Cyclicals 9.3 9.4
Consumer Staples 20.4 26.5
Credit-Sensitive & Financial Services 16.0 11.3
Energy 8.3 10.6
Transports 2.4 1.7
Utilities 9.8 11.4
[FN]
*An unmanaged broad-based index comprised of common stocks.
DEAR SHAREHOLDER
The change of leadership in the US Congress is beginning to impact
the investment environment as the "Contract with America" is
starting to take shape and modify the outlook for several
industries. It has taken seven increases in the Federal Funds rate,
virtually doubling that interest rate level, to finally produce some
discernible evidence of economic deceleration, long after it had
been forecast to occur. Believing that long-term interest rates had
overreacted to the threat of inflation, we raised our allocation to
bonds in the closing months of 1994 and lengthened the bond
portfolio's average life. These actions added to portfolio return as
the yield on 30-year Treasury securities dropped from the 8.15% area
at the beginning of 1995 to 7.38% at the end of the March quarter.
<PAGE>
Negative consequences of the increase in short-term interest rates
include interest rate increases in those economies where currencies
are tied to the US dollar and concerns of slower growth going
forward, notably in Mexico and Hong Kong. We had little exposure to
the Hong Kong stock market, which is dominated by interest rate-
sensitive real estate issues. Instead, our investments focused on
other Pacific Rim countries which we believe have better growth
potential. However, the devaluation of the Mexican peso and
subsequent declines in its financial markets have had a negative
impact on our portfolio as we maintain some investments there. Our
belief that the currency would be stabilized in perhaps six weeks
from mid-December encouraged us to temporarily maintain Mexican
equity positions for a reflex rally. Failure to stabilize the peso
in over two months led to the expectation of a sustained economic
recession and a redirection of some capital to other emerging
markets which have more stable currencies and political
environments, including Chile and Indonesia. Nonetheless, we have
maintained modest participation in Mexico through selected issues
which we believe will eventually achieve above-average growth.
The US equity market performed well from the lows of late November
in concert with the bond market. In spite of the doubling of short-
term interest rates over the last year, equity indexes have held up
because profits for industrial companies in the Standard & Poor's
500 rose strongly, increasing over 26% in 1994. However, our
allocation to this sector declined in response to the projected,
marked deceleration in corporate earnings for 1996 as a result of
the transition to a slower growth economy. The decline in bond
yields during February improved the equity market outlook, and we
returned the assets to equities, but we changed the areas
emphasized. Within US equities, we reduced weightings of both basic
industry and consumer cyclical stocks, believing the eventual
slowing in the economy would hurt earnings prospects. We added to
our positions in the financial and utility sectors in keeping with
our positive stance toward the fixed-income markets. These sectors
of the market had strong relative performance in the period. We
continue to favor investments in capital goods and technology,
particularly telecommunications infrastructure, which we believe are
becoming the growth stocks of the 1990s. We also began to build
participation in larger-capitalized US-based corporations which
derive substantial income from outside the United States and benefit
from a decline in the US dollar.
Investment Strategy
During February, the Federal Reserve Board increased interest rates
for the seventh time. We believe this is enough to slow the US
economy and inflationary fears. We see incipient signs of slower
demand for housing, auto and retail goods, thus leading us to a
favorable posture toward fixed-income investments and interest rate-
sensitive equities.
<PAGE>
However, the US dollar has come under severe pressure relative to
the Japanese yen and German Deutschemark, leading many investors to
suggest it is premature for the Federal Reserve Board to stop
raising interest rates let alone ease monetary policy. We also
believe investors were disappointed by the inability of Congress to
pass the Balanced Budget Amendment, indicating a lack of commitment
by the United States to get its fiscal house in order, at the same
time that increasing trade deficits need to be financed by
international investors. We believe the Federal Reserve Board can be
successful in engineering a soft landing, bringing gross domestic
product growth into its preferred range of 2.5% -3.0%, and that by
year-end long-term interest rates will be lower than current levels.
We remain cautious toward the equity markets and prefer to reduce
our allocation to this sector on strength in response to the
transitional nature of the economy. We recognize earnings growth is
slowing from very high rates last year, which would make it
difficult for stocks to advance from current record high levels. In
fact, many stocks are off from their peak levels although the
popular indexes recently achieved new high price levels.
Additionally, high interest rates on cash equivalents have made us
willing to assume a slightly more defensive posture relative to
normal cash levels. We prefer to raise cash to support portfolio
value in the event of an equity market correction. We anticipate
future buying opportunities when the earnings and economic outlooks
have better visibility. Outside the United States, we continue to
seek undervalued investment opportunities with favorable operating
prospects which are likely to benefit from strong currencies in the
markets they serve.
In Conclusion
We thank you for your continued investment in Merrill Lynch Balanced
Fund for Investment and Retirement, and we look forward to sharing
our strategy with you in our upcoming quarterly report to
shareholders.
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
(Denis B. Cummings)
Denis B. Cummings
Vice President and Portfolio Manager
April 27, 1995
<PAGE>
Proxy Results
During the six-month period ended March 31, 1995, Merrill Lynch
Balanced Fund for Investment and Retirement shareholders voted on
the following proposals. Proposals 1, 2 and 4 were approved at a
special shareholders' meeting on Sep-tember 27, 1994. Proposal 3 was
passed at a special shareholders' meeting on January 31, 1995. The
description of each proposal and number of shares voted are as
follows:
<TABLE>
<CAPTION>
Shares Voted Shares Voted
For Without Authority
<S> <S> <C> <C>
1. To elect the Fund's Board of Directors: Kenneth S. Axelson 62,998,528 1,590,651
Herbert I. London 63,097,207 1,491,972
Robert R. Martin 68,079,505 1,509,674
Joseph L. May 68,083,183 1,505,996
Andre F. Perold 68,100,451 1,488,728
Arthur Zeikel 63,062,432 1,526,747
<CAPTION>
Shares Voted Shares Voted Shares Voted
For Against Abstain
<S> <C> <C> <C>
2. To select Deloitte & Touche LLP as the Fund's independent auditors. 62,190,040 776,157 1,622,982
3. To approve certain changes to the Fund's fundamental investment restrictions. 29,899,623 1,633,880 2,700,038
4. To amend the Fund's articles of incorporation to implement the Merrill
Lynch Select Pricing SM System. 55,403,202 3,100,595 6,085,382
</TABLE>
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 approximately 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 below and on page 5. "Aggregate Total Return" tables
for Class C and Class D Shares are also presented below. Data for
all of the Fund's shares, including Class C and Class D Shares, are
presented in the "Recent Performance Results" table on page 6.
The "Recent Performance Results" table 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 March 31, 1995 and
for Class C and Class D Shares for the since inception and 3-month
periods ended March 31, 1995. All data in this table assume
imposition of the actual total expenses incurred by each class of
shares during the relevant period.
None of the past results shown should be considered a representation
of future performance. Investment return and principal value of
shares will fluctuate so that shares, when redeemed, may be worth
more or less than their original cost. Dividends paid to each class
of shares will vary because of the different levels of account
maintenance, distribution and transfer agency fees applicable to
each class, which are deducted from the income available to be paid
to shareholders.
Average Annual Total Return
% Return Without % Return With
Sales Charge Sales Charge**
Class A Shares*
Year Ended 3/31/95 +1.45% -3.88%
Five Years Ended 3/31/95 +7.92 +6.76
Inception (10/27/88)
through 3/31/95 +8.48 +7.57
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
<PAGE>
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 3/31/95 +0.42% -3.20%
Five Years Ended 3/31/95 +6.81 +6.81
Inception (11/29/85) through 3/31/95 +7.82 +7.82
[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 3/31/95 -0.49% -1.39%
[FN]
*Maximum contingent deferred 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**
Class D Shares*
Inception (10/21/94) through 3/31/95 -0.15% -5.39%
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
<PAGE>
PERFORMANCE DATA (continued)
<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
1/1/95--3/31/95 10.19 10.47 -- -- + 2.75
------ ------
Total $3.028 Total $3.898
Cumulative total return as of 3/31/95: +68.72%**
<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>
<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
1/1/95--3/31/95 10.37 10.62 -- -- + 2.41
------ ------
Total $3.530 Total $3.976
Cumulative total return as of 3/31/95: +102.00%**
<PAGE>
<FN>
*Figures may include short-term capital gains distributions.
**Figures assume reinvestment of all dividends and capital gains
distributions at net asset value on the ex-dividend date, and do not
reflect deduction of any sales charge; results would be lower if
sales charge was deducted.
</TABLE>
PERFORMANCE DATA (concluded)
<TABLE>
Recent Performance Results
<CAPTION>
12 Month 3 Month
3/31/95 12/31/94 3/31/94++ % Change++ % Change
<S> <C> <C> <C> <C> <C>
ML Balanced Fund Class A Shares* $10.47 $10.19 $11.67 - 2.46%(1) +2.75%
ML Balanced Fund Class B Shares* 10.62 10.37 11.75 - 1.88(1) +2.41
ML Balanced Fund Class C Shares* 10.52 10.27 11.74 - 2.64(1) +2.43
ML Balanced Fund Class D Shares* 10.46 10.18 11.66 - 2.46(1) +2.75
ML Balanced Fund Class A Shares--Total Return* + 1.45(2) +2.75
ML Balanced Fund Class B Shares--Total Return* + 0.42(3) +2.41
ML Balanced Fund Class C Shares--Total Return* - 0.49(4) +2.43
ML Balanced Fund Class D Shares--Total Return* - 0.15(3) +2.75
S&P 500/ML B0A0 Blended Index--Total Return** +10.06 +7.30
<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 shown 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 $0.262 per share ordinary
income dividends and $0.885 per share capital gains distributions.
(4)Percent change includes reinvestment of $0.246 per share ordinary
income dividends and $0.885 per share capital gains distributions.
</TABLE>
<PAGE>
PORTFOLIO INFORMATION
Top Ten Equity Holdings Percent of
As of March 31, 1995 Net Assets
Computer Sciences Corp. 2.4%
W. W. Grainger 1.8
Mobil Oil Corp. 1.8
Humana Inc. 1.6
Procter & Gamble Co. 1.6
Danka Business Systems PLC (ADR) 1.6
International Telephone & Telegraph Corp. 1.5
Eastman Chemical Co. 1.5
Singer Co. N.V. (ADR) 1.5
News Corp. Ltd. (Preferred) (ADR) l.5
<TABLE>
SCHEDULE OF INVESTMENTS
<CAPTION>
Face Value Percent of
Industries Amount* Corporate Bonds Cost (Note 1a) Net Assets
<S> <C> <S> <C> <C> <C>
Financial Services $ 10,000,000 Ford Capital BV, 9.375% due 1/01/1998 $ 10,037,900 $ 10,470,000 1.6%
5,000,000 Landeskreditbank, N.V., 7.875% due 4/15/2004 4,972,067 5,084,350 0.8
Financial Services-- 10,000,000 American General Financial Corp., 7.38%
Consumer due 5/13/1997 9,993,200 10,008,900 1.5
Total Investments in Corporate Bonds 25,003,167 25,563,250 3.9
Country Foreign Government & Agency Obligations
Italy 5,000,000 Republic of Italy, 8.75% due 2/08/2001 5,373,050 5,143,755 0.8
Total Investments in Foreign Government &
Agency Obligations 5,373,050 5,143,755 0.8
US Government & Agency Obligations
<PAGE>
United States 4,910,000 Federal Home Loan Mortgage Corp., REMIC (a)
1243-HP, 5.625% due 11/25/2015 4,788,017 4,554,025 0.7
Federal National Mortgage Association:
10,363,821 7.00% due 5/01/2024 9,557,386 9,761,372 1.5
9,768,240 8.00% due 10/01/2024 9,327,143 9,670,557 1.5
19,800,000 8.00% due 12/01/2024 19,450,407 19,602,000 3.0
US Treasury Notes:
55,000,000 7.875% due 8/15/2001 53,943,600 57,002,550 8.7
25,000,000 6.25% due 2/15/2003 25,710,938 23,543,000 3.6
35,000,000 5.75% due 8/15/2003 36,432,812 31,751,650 4.8
22,000,000 US Treasury STRIPS++, 4.79% due 5/15/2000 (b) 16,126,705 15,430,140 2.3
Total Investments in US Government &
Agency Obligations 175,337,008 171,315,294 26.1
Foreign Obligations
Germany Bundes:
DM 22,000,000 6.375% due 5/20/1998 13,923,234 15,908,618 2.4
39,000,000 7.375% due 1/03/2005 28,013,955 28,348,387 4.3
17,000,000 Deutschland Republic, 8.00% due 7/22/2002 11,145,767 12,813,978 1.9
Total Investments in Foreign
Obligations 53,082,956 57,070,983 8.6
Total Investments in Corporate Bonds,
Foreign Government & Agency Obligations,
US Government & Agency Obligations &
Foreign Obligations 258,796,181 259,093,282 39.4
Shares
Held US Stocks & Warrants
Basic Industry
Chemicals 180,000 Eastman Chemical Co. 9,257,123 10,012,500 1.5
Packaging 70,000 Crown Cork & Seal Co., Inc. 2,079,915 3,071,250 0.5
Total Basic Industry 11,337,038 13,083,750 2.0
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued)
<CAPTION>
Shares Value Percent of
Industries Held US Stocks and Warrents Cost (Note 1a) Net Assets
<S> <C> <S> <C> <C> <C>
Capital Spending
Communication 211,700 ADC Telecommunications, Inc. (f) $ 4,188,668 $ 6,245,150 0.9%
Equipment 120,000 DSC Communications Corp. 2,774,596 3,900,000 0.6
68,000 Tellabs, Inc. 2,391,841 3,944,000 0.6
Computer Services 325,000 Computer Sciences Corp. 10,065,467 16,046,875 2.4
120,000 General Motors Corp. (Class E) 4,691,844 4,665,000 0.7
Electrical Equipment 120,000 General Electric Company PLC 6,531,438 6,495,000 1.0
190,000 W.W. Grainger 11,523,202 11,970,000 1.8
Electronics 90,000 Solectron Corp. 2,446,725 2,632,500 0.4
Environmental Control 575,000 Wheelabrator Technologies, Inc. 7,520,434 7,834,375 1.2
Multi-Industry 150,000 Corning, Inc. 4,852,234 5,400,000 0.8
Office Equipment 399,100 Danka Business Systems PLC (ADR)(c)(l) 6,939,683 10,426,488 1.6
Semiconductors 60,000 Intel Corp. 4,822,836 5,085,000 0.8
Software 27,000 Microsoft Corp. (f) 1,842,853 1,917,000 0.3
Total Capital Spending 70,591,821 86,561,388 13.1
Consumer Cyclicals
Appliances 425,000 Singer Co. N.V. (ADR) (c)(1) 11,805,790 9,987,500 1.5
350,000 Sunbeam-Oster Inc. 6,963,757 8,006,250 1.2
<PAGE>
Retail 55,000 Heilig-Meyers Co. 1,395,525 1,203,125 0.2
45,000 Sears, Roebuck and Co. 2,276,577 2,401,875 0.4
Tires & Rubber 200,000 Cooper Tire & Rubber Co. 4,986,228 5,675,000 0.9
Total Consumer Cyclicals 27,427,877 27,273,750 4.2
Consumer Staples
Beverages 45,000 PepsiCo, Inc. l,735,320 1,755,000 0.3
Consumer-- 45,000 Duracell International Inc. 1,868,804 2,013,750 0.3
Miscellaneous
Drug/Pharmaceuticals 70,000 American Home Products Corp. 4,664,503 4,987,500 0.8
Drug Stores 80,000 Revco D.S., Inc. 1,725,576 1,840,000 0.3
Drugs & Hospital Supply 220,000 Merck & Co., Inc. 8,128,739 9,377,500 1.4
Foods 80,000 General Mills, Inc. 4,712,010 4,770,000 0.7
Healthcare 419,100 Humana Inc. 7,946,708 10,739,437 1.6
210,000 Physician Corp. of America 4,417,467 4,620,000 0.7
Household Products 162,000 Procter & Gamble Co. 9,268,122 10,732,500 1.6
Photography 130,000 Eastman Kodak Co. 6,510,533 6,906,250 1.0
Publishing 45,000 Gannett Co., Inc. 2,447,096 2,401,875 0.4
Total Consumer Staples 53,424,878 60,143,812 9.1
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued)
<CAPTION>
Shares Value Percent of
Industries Held US Stocks and Warrents Cost (Note 1a) Net Assets
<S> <C> <S> <C> <C> <C>
Credit-Sensitive & Financial Services
Banking 220,000 The Bank of New York Co. $ 6,229,929 $ 7,232,500 1.1%
15,000 The Bank of New York Co. (Warrants) (e) 168,750 170,625 0.0
200,000 BankAmerica Corp. 9,113,967 9,650,000 1.5
270,000 Espirito Santo Financial Holdings S.A.(ADR)(c)(1) 3,798,181 2,801,250 0.4
45,000 Morgan (J.P.) & Co. Inc. 2,858,619 2,745,000 0.4
Insurance 66,400 Aetna Life & Casualty Co. 3,554,546 3,784,800 0.6
80,000 American International Group, Inc. 8,387,269 8,340,000 1.3
99,500 International Telephone & Telegraph Corp. 8,599,833 10,211,187 1.5
70,000 National Re Corp. 2,016,028 2,047,500 0.3
Total Credit-Sensitive & Financial Services 44,727,122 46,982,862 7.1
Energy
Energy--Related 250,000 California Energy Co., Inc. 4,475,191 4,000,000 0.6
Oil--Integrated 125,000 Mobil Oil Corp. 9,757,153 11,578,125 1.8
75,000 Royal Dutch Petroleum Co. N.V. (ADR)(c)(1) 6,692,188 9,000,000 1.4
Total Energy 20,924,532 24,578,125 3.8
Transports
Railroads 35,000 CSX Corp. 2,691,710 2,756,250 0.4
250,000 Southern Pacific Rail Co. (f) 5,195,468 4,375,000 0.7
Total Transports 7,887,178 7,131,250 1.1
<PAGE>
Utilities
Utilities-- 90,000 ALC Communications Corp. (f) 2,701,663 3,071,250 0.5
Communications 180,000 GTE Corp. 5,790,102 5,985,000 0.9
410,000 LDDS Communications Inc. (Class A) (f) 9,427,929 9,481,250 1.4
150,000 MCI Communications Corp. 4,296,212 3,075,000 0.5
170,000 Southwestern Bell Corp. 7,282,605 7,161,250 1.1
Total Utilities 29,498,511 28,773,750 4.4
Total Investments in US Stocks & Warrants 265,818,957 294,528,687 44.8
Foreign Stocks
Australia
Banking 230,713 National Australia Bank Ltd. 1,510,061 1,946,317 0.3
Media/Publishing 575,000 News Corp. Ltd. (Preferred) (ADR)(c) 9,900,314 9,918,750 1.5
Retail 425,250 Coles Myer Ltd. 1,813,741 1,413,804 0.2
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued)
<CAPTION>
Shares Value Percent of
Industries Held Foreign Stocks Cost (Note 1a) Net Assets
<S> <C> <S> <C> <C> <C>
Canada
Appliances 280,000 Semi-Tech Corp.(d) $ 2,947,648 $ 911,302 0.1%
Chemicals 135,000 NOVA Corp. (Class A) 1,418,715 1,181,250 0.2
Retail Stores 75,000 Hudson's Bay Company (Ordinary) 2,011,842 1,495,440 0.2
<PAGE>
Chile
Banking 77,000 Banco O'Higgins (ADR)(c) 1,181,242 1,366,750 0.2
Packaging 60,000 Christalerias de Chile S.A. (ADR)(c) 1,105,062 1,020,000 0.2
Utilities--Electric 96,600 ++++Distribuidora Chilectra Metropolitana
S.A. (ADR)(c) 2,696,793 4,588,500 0.7
Denmark
Utilities-- 120,000 Tele Danmark A/S (ADR)(c) 2,900,712 3,180,000 0.5
Communications
France
Metals--Non-Ferrous 21,100 Eramet (f) 1,385,457 1,405,495 0.2
Utilities--Water 15,243 Compagnie Generale des Eaux 1,427,181 1,549,684 0.2
Hong Kong
Banking 286,378 HSBC Holdings PLC 1,750,973 3,231,777 0.5
Electrical Equipment 1,300,000 Johnson Electric Co. 2,603,189 3,060,208 0.5
Oil/Gas 2,000,000 Shanghai Petrochemical Co., Ltd. 668,375 614,370 0.1
Indonesia
Telecommunications 9,000 P.T. Indonesian Satellite (ADR)(c) 311,138 317,250 0.0
Mexico
Multi-Industry 433,800 ++++Grupo Carso, S.A. de C.V. (ADR)(c)(f) 3,832,850 3,687,300 0.6
Retail Stores 430,000 CIFRA, S.A. de C.V. `C' 1,129,713 521,557 0.1
Sweden
Appliances 12,000 Electrolux AB 'B' Free 610,647 540,482 0.1
</TABLE>
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS (concluded)
<CAPTION>
Shares Value Percent of
Industries Held Foreign Stocks Cost (Note 1a) Net Assets
<S> <C> <S> <C> <C> <C>
United Kingdom
Electrical Equipment 151,181 Siebe PLC $ 1,319,181 $ 1,338,848 0.2%
Multi-Industry 50,000 Hanson PLC (Sponsored) (ADR)(c) 1,106,687 943,750 0.1
Oil--Integrated 35,515 British Petroleum Co. PLC (ADR)(c) 2,618,754 2,978,821 0.5
Total Investments in Foreign Stocks 46,250,275 47,211,655 7.2
Total Investments in US & Foreign
Stocks & Warrants 312,069,232 341,740,342 52.0
Face
Amount* Issue
Short-Term Securities
Commercial Paper** $31,019,000 General Electric Capital Corp., 6.25%
due 4/03/1995 31,008,230 31,008,230 4.7
10,000,000 IBM Credit Corp., 6.00% due 4/06/1995 9,991,667 9,991,667 1.5
Total Investments in Short-Term Securities 40,999,897 40,999,897 6.2
Total Investments 611,865,310 641,833,521 97.6
Number of Premiums
Shares Received
Options Written
Call Options Written 9,000 ALC Communications Corp., expiring April 1995
at US$35 (9,292) (6,188) 0.0
6,000 DSC Communications Corp., expiring April 1995
at US$35 (6,195) (3,000) 0.0
Total Options Written (15,487) (9,188) 0.0
<PAGE>
Total Investments, Net of Options Written $611,849,823 641,824,333 97.6
============
Other Assets Less Liabilities 15,742,242 2.4
------------ ------
Net Assets $657,566,575 100.0%
============ ======
<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.
(e)Warrants entitle the Fund to purchase a predetermined number of
shares of Common Stock. The purchase price and number of shares are
subject to adjustment under certain conditions until the expiration
date.
(f)Non-income producing security.
*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).
++++Restricted securities as to resale. The value of the Fund's
investments in restricted securities was approximately $8,276,000,
representing 1.26% of net assets.
Acquisition Value
Issue Dates Cost (Note la)
Distribuidora Chilectra
Metropolitana S.A. (ADR) 2/12/1992-2/26/1992 $2,696,793 $4,588,500
Grupo Carso, S.A. de C.V.
(ADR) 9/24/1991-1/24/1992 3,832,850 3,687,300
---------- ----------
Total $6,529,643 $8,275,800
========== ==========
See Notes to Financial Statements.
</TABLE>
<PAGE>
FINANCIAL INFORMATION
<TABLE>
Statement of Assets and Liabilities as of March 31, 1995
<S> <S> <C> <C>
Assets: Investments, at value (identified cost--$611,865,310) (Note 1a) $641,833,521
Cash 1,449,001
Receivables:
Securities sold $ 16,221,629
Interest 4,157,854
Dividends 794,897
Capital shares sold 580,160 21,754,540
------------
Prepaid registration fees and other assets (Note 1f) 126,384
------------
Total assets 665,163,446
------------
Liabilities: Options written, at value (premiums received--$15,487)
(Notes 1a & 1b) 9,188
Payables:
Capital shares redeemed 4,199,583
Securities purchased 2,346,043
Investment adviser (Note 2) 357,956
Distributor (Note 2) 296,856 7,200,438
------------
Accrued expenses and other liabilities 387,245
------------
Total liabilities 7,596,871
------------
Net Assets: Net assets $657,566,575
============
Net Assets Class A Shares of Common Stock, $.01 par value, 500,000,000
Consist of: shares authorized $ 29,943
Class B Shares of Common Stock, $.01 par value, 500,000,000
shares authorized 233,051
Class C Shares of Common Stock, $.01 par value, 500,000,000
shares authorized 526
Class D Shares of Common Stock, $.01 par value, 500,000,000
shares authorized 361,574
Paid-in capital in excess of par 632,168,736
Undistributed investment income--net 3,032,050
Accumulated realized capital losses on investments and foreign
currency transactions--net (8,387,506)
Unrealized appreciation on investments and foreign currency
transactions--net 30,128,201
------------
Net assets $657,566,575
============
<PAGE>
Net Asset Value: Class A--Based on net assets of $31,359,822 and 2,994,307 shares
outstanding $ 10.47
============
Class B--Based on net assets of $247,561,195 and 23,305,072 shares
outstanding $ 10.62
============
Class C--Based on net assets of $553,332 and 52,577 shares
outstanding $ 10.52
============
Class D--Based on net assets of $378,092,226 and 36,157,390 shares
outstanding $ 10.46
============
See Notes to Financial Statements.
</TABLE>
FINANCIAL INFORMATION (continued)
<TABLE>
Statement of Operations for the Six Months Ended March 31, 1995
<S> <S> <C> <C>
Investment Interest and discount earned $ 10,156,943
Income Dividends (net of $101,499 foreign withholding tax) 3,066,105
(Notes 1d & 1e): Other 14,051
------------
Total income 13,237,099
------------
Expenses: Investment advisory fees (Note 2) 2,203,294
Distribution fees--Class B (Note 2) 1,991,223
Transfer agent fees--Class B (Note 2) 530,767
Account maintenance fees--Class D (Note 2) 322,029
Transfer agent fees--Class D (Note 2) 321,216
Printing and shareholder reports 206,111
Custodian fees 77,819
Accounting services (Note 2) 65,438
Professional fees 44,623
Transfer agent fees--Class A (Note 2) 42,338
Registration fees (Note 1f) 41,902
Directors' fees and expenses 20,951
Pricing fees 1,905
Distribution fees--Class C (Note 2) 1,139
Transfer agent fees--Class C (Note 2) 321
Other 7,075
------------
Total expenses 5,878,151
------------
Investment income--net 7,358,948
------------
<PAGE>
Realized & Realized loss from:
Unrealized Gain Investments--net $ (6,086,528)
(Loss) on Foreign currency transactions--net (2,150,268) (8,236,796)
Investments & ------------
Foreign Change in unrealized appreciation on:
Currency Investments--net (3,999,337)
Transactions--Net Foreign currency transactions--net 140,192 (3,859,145)
(Notes 1b, ------------ ------------
1c, 1e & 3): Net realized and unrealized loss on investments and foreign
currency transactions (12,095,941)
------------
Net Decrease in Net Assets Resulting from Operations $ (4,736,993)
============
See Notes to Financial Statements.
</TABLE>
FINANCIAL INFORMATION (continued)
<TABLE>
Statements of Changes in Net Assets
<CAPTION>
For the Six For the Year
Months Ended Ended
Increase (Decrease) in Net Assets: Mar. 31, 1995 Sept. 30, 1994
<S> <S> <C> <C>
Operations: Investment income--net $ 7,358,948 $ 13,984,464
Realized gain (loss) on investments and foreign currency
transactions--net (8,236,796) 66,569,641
Change in unrealized appreciation on investments
and foreign currency transactions--net (3,859,145) (72,060,997)
Net increase (decrease) in net assets resulting from operations (4,736,993) 8,493,108
------------ ------------
Dividends & Investment income--net:
Distributions to Class A (601,180) (1,253,348)
Shareholders Class B (1,723,750) (14,802,935)
(Note 1g): Class C (1,775) --
Class D (5,227,448) --
Realized gain on investments--net:
Class A (3,297,664) (4,103,194)
Class B (27,299,110) (75,192,306)
Class C (10,961) --
Class D (29,225,123) --
------------ ------------
Net decrease in net assets resulting from dividends and
distributions to shareholders (67,387,011) (95,351,783)
------------ ------------
<PAGE>
Capital Share Net decrease in net assets derived from capital share
Transactions transactions (20,108,111) (34,985,543)
(Note 4): ------------ ------------
Net Assets: Total decrease in net assets (92,232,115) (121,844,218)
Beginning of period 749,798,690 871,642,908
------------ ------------
End of period* $657,566,575 $749,798,690
============ ============
<FN>
*Undistributed investment income--net $ 3,032,050 $ 3,227,255
============ ============
See Notes to Financial Statements.
</TABLE>
FINANCIAL INFORMATION (continued)
<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
March 31, For the Year Ended September 30,
Increase (Decrease) in Net Asset Value: 1995** 1994** 1993 1992 1991
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 11.67 $ 13.02 $ 12.57 $ 11.94 $ 10.61
Operating -------- -------- -------- -------- --------
Performance: Investment income--net .15 .32 .43 .47 .70
Realized and unrealized gain (loss) on
investments and foreign currency
transactions (1)--net (.20) (.07) 1.29 .61 1.63
-------- -------- -------- -------- --------
Total from investment operations (.05) .25 1.72 1.08 2.33
-------- -------- -------- -------- --------
Less dividends and distributions:
Investment income--net (.18) (.37) (.39) (.45) (.62)
Realized gain on investments--net (.97) (1.23) (.88) -- (.38)
-------- -------- -------- -------- --------
Total dividends and distributions (1.15) (1.60) (1.27) (.45) (1.00)
-------- -------- -------- -------- --------
Net asset value, end of period $ 10.47 $ 11.67 $ 13.02 $ 12.57 $ 11.94
======== ======== ======== ======== ========
<PAGE>
Total Investment Based on net asset value per share (0.12%)+++ 1.81% 14.62% 9.23% 23.14%
Return:*** ======== ======== ======== ======== ========
Ratios to Average Expenses 1.00%* .83% .83% .81% .85%
Net Assets: ======== ======== ======== ======== ========
Investment income--net 2.82%* 2.68% 3.09% 3.18% 3.64%
======== ======== ======== ======== ========
Supplemental Net assets, end of period (in thousands) $ 31,360 $ 39,963 $ 40,688 $ 20,320 $ 12,839
Data: ======== ======== ======== ======== ========
Portfolio turnover 35.56% 59.15% 79.55% 65.40% 173.76%
======== ======== ======== ======== ========
<FN>
*Annualized.
**Based on average number of shares outstanding during the period.
***Total investment returns exclude the effect of sales loads.
+++Aggregate total investment return.
(1)Foreign currency transaction amounts have been reclassified to
conform to the 1994 presentation.
See Notes to Financial Statements.
</TABLE>
FINANCIAL INFORMATION (continued)
<TABLE>
Financial Highlights (continued)
<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
March 31, For the Year Ended September 30,
Increase (Decrease) in Net Asset Value: 1995** 1994** 1993 1992 1991
<S> <S> <C> <C> <C> <C> <C>
Per Share Net asset value, beginning of period $ 11.75 $ 13.09 $ 12.62 $ 11.99 $ 10.60
Operating -------- -------- -------- -------- --------
Performance: Investment income--net .10 .20 .24 .29 .39
Realized and unrealized gain (loss) on
investments and foreign currency
transactions (1)--net (.20) (.07) 1.37 .66 1.83
-------- -------- -------- -------- --------
Total from investment operations (.10) .13 1.61 .95 2.22
<PAGE> -------- -------- -------- -------- --------
Less dividends and distributions:
Investment income--net (.06) (.24) (.26) (.32) (.45)
Realized gain on investments--net (.97) (1.23) (.88) -- (.38)
-------- -------- -------- -------- --------
Total dividends and distributions (1.03) (1.47) (1.14) (.32) (.83)
-------- -------- -------- -------- --------
Net asset value, end of period $ 10.62 $ 11.75 $ 13.09 $ 12.62 $ 11.99
======== ======== ======== ======== ========
Total Investment Based on net asset value per share (0.57%)+++ 0.76% 13.49% 8.01% 21.91%
Return:*** ======== ======== ======== ======== ========
Ratios to Average Expenses, excluding distribution fees 1.03%* .86% .85% .85% .90%
Net Assets: ======== ======== ======== ======== ========
Expenses 2.03%* 1.86% 1.85% 1.85% 1.90%
======== ======== ======== ======== ========
Investment income--net 1.84%* 1.65% 1.99% 2.10% 3.37%
======== ======== ======== ======== ========
Supplemental Net assets, end of period (in thousands) $247,561 $709,836 $830,955 $886,920 $986,895
Data: ======== ======== ======== ======== ========
Portfolio turnover 35.56% 59.15% 79.55% 65.40% 173.76%
======== ======== ======== ======== ========
<FN>
*Annualized.
**Based on average number of shares outstanding during the period.
***Total investment returns exclude the effect of sales loads.
+++Aggregate total investment return.
(1)Foreign currency transaction amounts have been reclassified to
conform to the 1994 presentation.
See Notes to Financial Statements.
</TABLE>
<PAGE>
FINANCIAL INFORMATION (concluded)
<TABLE>
Financial Highlights (concluded)
<CAPTION>
The following per share data and ratios have been derived For the Period
from information provided in the financial statements. October 21, 1994++ to
March 31, 1995
Increase (Decrease) in Net Asset Value: Class C** Class D**
<S> <S> <C> <C>
Per Share Net asset value, beginning of period $ 11.74 $ 11.66
Operating ------------ ------------
Performance: Investment income--net .08 .13
Realized and unrealized loss on investments and foreign currency
transactions--net (.17) (.19)
------------ ------------
Total from investment operations (.09) (.06)
------------ ------------
Less dividends and distributions:
Investment income--net (.16) (.17)
Realized gain on investments--net (.97) (.97)
------------ ------------
Total dividends and distributions (1.13) (1.14)
------------ ------------
Net asset value, end of year $ 10.52 $ 10.46
============ ============
Total Investment Based on net asset value per share (0.49%)+++ (0.15%)+++
Return:*** ============ ============
Ratios to Average Expenses, excluding account maintenance and distribution fees 1.07%* 1.03%*
Net Assets: ============ ============
Expenses 2.07%* 1.28%*
============ ============
Investment income--net 1.76%* 2.46%*
============ ============
Supplemental Net assets, end of period (in thousands) $ 553 $ 378,092
Data: ============ ============
Portfolio turnover 35.56% 35.56%
============ ============
<FN>
*Annualized.
**Based on an average number of shares outstanding during the
period.
***Total investment returns exclude the effect of sales loads.
++Commencement of Operations.
+++Aggregate total investment return.
See Notes to Financial Statements.
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies:
Merrill Lynch Retirement Benefit Investment Program, Inc., Full
Investment Portfolio does business under the name Merrill Lynch
Balanced Fund for Investment and Retirement. Merrill Lynch Balanced
Fund for Investment and Retirement (the "Fund") is registered under
the Investment Company Act of 1940 as a 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 Fund offers four classes of shares under the Merrill Lynch
Select Pricing SM System. Class A and Class D Shares are sold with a
front-end sales charge. Class B and Class C Shares 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 Fund.
(a) Valuation of investments--Portfolio securities which are traded
on stock exchanges are valued at the last sale price on exchanges 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 value
quotations are not available are valued at their fair value as
determined in good faith by or under the direction of the Fund's
Board of Directors.
<PAGE>
(b) Derivative financial instruments--The Fund 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.
* Forward foreign exchange contracts--The Fund 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 Fund's records. However, the effect on operations is
recorded from the date the Fund enters into such contracts. Premium
or discount is amortized over the life of the contracts.
* Financial futures contracts--The Fund may 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 Fund
deposits and maintains as collateral such initial margin as required
by the exchange on which the transaction is effected. Pursuant to
the contract, the Fund 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 Fund as unrealized gains or losses. When the
contract is closed, the Fund 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 Fund 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 Fund,
sold by the Fund but not yet delivered, or committed or anticipated
to be purchased by the Fund.
* Options--The Fund is authorized to write covered call options and
purchase put options. When the Fund writes an option, an amount
equal to the premium received by the Fund 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.
<PAGE>
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 Fund enters into a closing transaction), the Fund
realized 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.
(c) 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) and
valuing (unrealized) assets and liabilities expressed in foreign
currencies into US dollars. Realized and unrealized gains or losses
from investments include the effects of foreign exchange sales on
investments.
(d) Income taxes--It is the Fund'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 by imposed on interest, dividends and capital
gains at various rates.
(e) Security transactions and investment income--Security
transactions 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 dividends from foreign securities are recorded as soon as
the Fund is informed of the ex-dividend date. Interest income
(including amortization of discount) is recognized on the accrual
basis. Realized gains and losses on security transactions are
determined on the identified cost basis.
(f) Prepaid registration fees--Prepaid registration fees are charged
to expense as the related shares are issued.
(g) Dividends and distributions--Dividends and distributions paid by
the Fund are recorded on the ex-dividend dates.
2. Investment Advisory Agreement and
Transaction with Affiliates:
The Fund 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 Fund 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 Fund's portfolio and
provides the necessary personnel, facilities, equipment and certain
other services necessary to the operations of the Fund. For such
services, the Fund pays a monthly fee based upon the average daily
value of the Fund's net assets at the following annual rates: 0.65%
of the average daily net assets not exceeding $500 million; 0.60% of
the average daily net assets exceeding $500 million but not
exceeding $1.5 billion; 0.55% of the average daily net assets
exceeding $1.5 billion but not exceeding $2.5 billion; 0.50% of the
average daily net assets exceeding $2.5 billion but not exceeding
$3.5 billion; and 0.45% of the average daily net assets exceeding
$3.5 billion. The most restrictive annual expense limitation
requires that the Adviser reimburse the Fund to the extent the
Fund's expenses (excluding interest, taxes, distribution fees,
brokerage fees and commissions, and extraordinary items) exceed 2.5%
of the Fund's first $30 million of average daily net assets, 2.0% of
the next $70 million of average daily net assets, and 1.5% of the
average daily net assets in excess thereof. No payment will be made
to MLAM during any fiscal year which will cause such expenses to
exceed the most restrictive expense limitation applicable at the
time of such payment.
NOTES TO FINANCIAL STATEMENTS (concluded)
Pursuant to the distribution plans (the "Distribution Plans")
adopted by the Fund in accordance with Rule 12b-1 under the
Investment Company Act of 1940, the Fund pays the Distributor an
ongoing account maintenance fee and a distribution fee.
These fees are accrued daily and paid monthly at the annual rates
based upon the average daily net assets of the shares as follows:
Account Distribution
Maintenance Fee Fee
Class B 0.25% 0.75%
Class C 0.25% 0.75%
Class D 0.25% --
<PAGE>
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
Fund. 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 March 31, 1995, MLFD earned underwriting
discounts and MLPF&S earned dealer concessions on the sales of the
Fund's Class A and Class D Shares as follows:
MLFD MLPF&S
Class A $ 242 $ 3,325
Class D $1,575 $26,750
For the six months ended March 31, 1995, MLPF&S received contingent
deferred sales charges of $149,052 relating to transactions in Class
B Shares.
In addition, MLPF&S received $68,247 in commissions on the execution
of portfolio security transactions for the Fund for the six months
ended March 31, 1995.
Financial Data Services, Inc. ("FDS"), a wholly-owned subsidiary of
ML & Co., is the Fund's transfer agent.
Accounting services are provided to the Fund by MLAM at cost.
Certain officers and/or directors of the Fund are officers and/or
directors of MLAM, MLPF&S, PSI, FDS, MLFD and/or ML & Co.
3. Investments:
Purchases and sales of investments, excluding short-term securities,
for the six months ended March 31, 1995 were $230,901,927 and
$304,766,010, respectively. Net realized and unrealized gains
(losses) as of March 31, 1995 were as follows:
Realized Unrealized
Gains (Losses) Gains
Long-term investments $(6,106,068) $ 29,968,211
Options written on
investments 19,540 6,299
Foreign currency
transactions (2,150,268) 153,691
----------- -------------
Total $(8,236,796) $ 30,128,201
=========== =============
<PAGE>
As of March 31, 1995, net unrealized appreciation for Federal income
tax purposes aggregated $29,974,510, of which $48,214,727 related to
appreciated securities and $18,240,217 related to depreciated
securities. The aggregate cost of investments less premiums received
for options written, at March 31, 1995 for Federal income tax
purposes was $611,849,823.
Transactions in call options for the six months ended March 31, 1995
were as follows:
Number of Premiums
Call Options Written Shares Received
Outstanding call options at
beginning of period 1,000 $ 1,783
Options written 36,800 42,183
Options exercised (3,100) (3,911)
Options closed (16,500) (5,028)
Options expired (3,200) (19,540)
----------- -------------
Outstanding call options at
end of period 15,000 $ 15,487
=========== =============
4. Capital Share Transactions:
Net decrease in net assets derived from capital share transactions
was $20,108,111 and $34,985,543 for the six months ended March 31,
1995 and the year ended September 30, 1994, respectively.
Transactions in capital shares for each class were as follows:
Class A Shares for the
Six Months Ended Dollar
March 31, 1995 Shares Amount
Shares sold 684,840 $ 7,334,789
Shares issued to shareholders
in reinvestment of dividends
and distributions 357,575 3,629,383
----------- -------------
Total issued 1,042,415 10,964,172
Shares redeemed (1,472,684) (15,434,319)
----------- -------------
Net decrease (430,269) $ (4,470,147)
=========== =============
<PAGE>
Class A Shares for the
Year Ended Dollar
September 30, 1994 Shares Amount
Shares sold 1,518,510 $ 18,698,722
Shares issued to shareholders
in reinvestment of dividends
and distributions 428,291 5,110,279
----------- -------------
Total issued 1,946,801 23,809,001
Shares redeemed (1,648,302) (19,908,322)
----------- -------------
Net increase 298,499 $ 3,900,679
=========== =============
Class B Shares for the
Six Months Ended Dollar
March 31, 1995 Shares Amount
Shares sold 1,328,068 $ 14,551,452
Shares issued to shareholders
in reinvestment of dividends
and distributions 2,339,355 24,165,534
----------- -------------
Total issued 3,667,423 38,716,986
Shares redeemed (4,970,749) (54,750,436)
Automatic converison of
shares (35,793,650) (408,705,721)
----------- -------------
Net decrease (37,096,976) $(424,739,171)
=========== =============
Class B Shares for the Year Dollar
Ended September 30, 1994 Shares Amount
Shares sold 2,858,236 $ 35,039,885
Shares issued to shareholders
in reinvestment of dividends
and distributions 6,329,365 76,402,900
----------- -------------
Total issued 9,187,601 111,442,785
Shares redeemed (12,275,154) (150,329,007)
----------- -------------
Net decrease (3,087,553) $ (38,886,222)
=========== =============
<PAGE>
Class C Shares for the Period
October 21, 1994++ to Dollar
March 31, 1995 Shares Amount
Shares sold 69,767 $ 738,011
Shares issued to shareholders
in reinvestment of dividends
and distributions 1,001 10,235
----------- -------------
Total issued 70,768 748,246
Shares redeemed (18,191) (188,947)
----------- -------------
Net increase 52,577 $ 559,299
=========== =============
[FN]
++Commencement of Operations.
Class D Shares for the Period
October 21, 1994++ to Dollar
March 31, 1995 Shares Amount
Shares sold 309,785 $ 3,250,397
Automatic conversion
of shares 36,070,377 408,705,721
Shares issued to shareholders
in reinvestment of dividends
and distributions 2,873,623 29,138,534
----------- -------------
Total issued 39,253,785 441,094,652
Shares redeemed (3,096,396) (32,552,744)
----------- -------------
Net increase 36,157,389 $ 408,541,908
=========== =============
[FN]
++Commencement of Operations.
5. Loan Securities:
At March 31, 1995, the Fund held US Treasury Bonds having an
aggregate value of approximately $2,000,000 as collateral for
portfolio securities loaned having a market value of approximately
$1,380,000.
<PAGE>
OFFICERS AND DIRECTORS
Arthur Zeikel, President and 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, NY 11245
Transfer Agent
Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, FL 32246-6484
(800) 637-3863
