MERRILL LYNCH
BALANCED FUND FOR
INVESTMENT AND
RETIREMENT, INC.
FUND LOGO
Quarterly Report
December 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.
Statements and other information herein are as dated and are subject
to change.
<PAGE>
Merrill Lynch
Balanced Fund for
Investment and
Retirement, Inc.
Box 9011
Princeton, NJ
08543-9011
Merrill Lynch Balanced Fund for Investment and Retirement, Inc.
PORTFOLIO SUMMARY AS OF DECEMBER 31, 1995
Security Diversification
Pie graph depicting Security Diversification as a percentage of net
assets as of December 31, 1995
US Stocks 52.2%
International Stocks 10.3%
US Bonds 25.8%
International Bonds 4.4%
Cash 5.3%
US Stock Sector Allocation
Pie graph depicting US Stock Sector Allocation as a percentage of
net assets as of December 31, 1995
Capital Spending 36.2%
Energy 8.3%
Basic Inustry 10.5%
Credit-Sensitive &
Financial Services 12.5%
Utilities 8.3%
Consumer Cyclicals 7.0%
Consumer Staples 17.2%
<PAGE>
US Domiciled Common Stock S&P
Investments Fund 500*
After-Tax Profit Margin 8.0% 7.3%
Yield 2.0% 2.2%
Price/Earnings Ratio** 19.0 18.0
Return on Equity 18.2% 18.0%
Average Capitalization (in billions) $16.6 $9.0
Earnings Growth Rate (5 yr. average) 16.0% 14.0%
[FN]
*An unmanaged broad-based index comprised of common stocks.
**Based on 1995 earnings estimates.
Merrill Lynch
Fixed-Income Investments Fund B0A0 Index*
Duration 5.0 Years 5.7 Years
Average Maturity 8.2 Years 9.6 Years
Asset Breakdown:
US Treasuries/Agencies 76.9% 76.0%
Corporates 11.4% 24.0%
International Governments 11.7% --
[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 86.8%
Japanese Yen 4.3
German Mark 3.5
Australian Dollar 1.8
Netherlands Guilder 0.8
Mexican Peso 0.7
Hong Kong Dollar 0.7
Norwegian Krone 0.6
Indonesian Rupiah 0.5
Canadian Dollar 0.3
Percent of US Equities vs. S&P
S&P 500 Index Fund vs. 500*
Basic Industry 10.5% 7.1%
Capital Spending 36.2 19.8
Conglomerates 0.0 1.0
Consumer Cyclicals 7.0 7.6
Consumer Staples 17.2 28.0
Credit-Sensitive &
Financial Services 12.5 12.9
Energy 8.3 9.7
Transports 0.0 1.6
Utilities 8.3 12.3
[FN]
*An unmanaged broad-based index comprised of common stocks.
<PAGE>
DEAR SHAREHOLDER
Economic Background
The US economy showed numerous signs of deceleration throughout the
fourth quarter of 1995, which gave rise to continuing speculation
that the Federal Reserve Board would move overtly to reaccelerate
the economy through a reduction in short-term interest rates.
Expectations of lower interest rates became the prevalent point of
view late in 1995 as labor costs were well behaved, commodity prices
advanced modestly, consumer spending was decelerating and the
Federal budget deficit was shrinking. Although forecasters of
corporate profits were less enthusiastic than they were earlier in
1995, it was reasoned that lower interest rates would lead to
economic reacceleration in 1996, a presidential election year.
Moreover, if interest rates declined, which they did, bonds would
represent less potent competition to equities which would achieve
higher price/earnings multiples while bond yields declined.
Historically, US budgets were agreed on in Congress and signed into
law by presidents as the fiscal year began on September 1. Recent
budgets have been less timely as the major political parties have
conducted a tug of war with the purse strings. In the fourth month
of this fiscal year, continuing funding resolutions expired,
government departments deemed non-critical closed and employees were
furloughed while the optimal balanced budget was negotiated.
Meanwhile, the US budget deficit as a percent of gross domestic
product (GDP) has shrunk to among the lowest of developed economies
in the world. Nonetheless, our electorate and much of the investing
public continues to be concerned over the size of the national debt
and the cost of carrying that debt, which in fact preempts our
spending priorities. Much of the revenue collected by Washington
goes to pay interest on the national debt annually, an expense which
must be covered before mandated spending, entitlements and
discretionary spending. Investors seem upbeat that we are making
progress as revenues are growing faster than expenditures and the
budget deficit is shrinking, but are very troubled when talks to
reach agreement on future deficit reduction do not progress.
<PAGE>
Meanwhile, American industry has continued to improve its
competitive position by substituting capital for labor and improving
productivity while employing innovative software solutions which
have added a new dimension to American ingenuity. All of this has
enabled corporate profits to rise to 8% of GDP, nearing the historic
peak of 9% achieved in the 1970s. Additionally, the improved trade
position has enabled the US dollar to firm in the currency markets,
increasing demand for US dollar-based investments at a time when we
are doing more saving domestically. This is also putting downward
pressure on yield levels and pushing price/earnings multiples
upward.
Investment Strategy
In the above context, we held an overweighted position in credit-
sensitive equities and assumed a modestly more defensive posture by
building the consumer staples and energy groups at the expense of
the capital spending and consumer cyclical groups which normally are
more sensitive to economic conditions. The Fund's bond portfolio was
shifted in favor of US dollar-denominated bonds as the dollar
strengthened. Since we do not anticipate a major decline in long-
term interest rates, we have not extended the average life of the
bond portfolio. Before calendar year-end 1996 it is likely the pace
of economic activity will reaccelerate, suggesting it would not be
appropriate to maintain a portfolio with extended maturities.
Earlier steps to secure profits in the technology groups proved
appropriate as they underperformed consumer staples during the
December quarter.
Since developing economies, particularly those that have tied their
currency to the US dollar, tend to outperform during periods of low
short-term US interest rates, we have gradually increased the Fund's
allocation to non-US stocks, emphasizing the developing economies in
the Pacific Rim and Japan which is struggling to reaccelerate
economic activity. Unusually low interest rates in Japan, coupled
with banking system reform, give much incentive to be positive on
Japanese equities.
In Conclusion
We thank you for your continued investment in Merrill Lynch Balanced
Fund for Investment and Retirement, Inc.
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
<PAGE>
(Denis B. Cummings)
Denis B. Cummings
Vice President and Portfolio Manager
January 24, 1996
PROXY RESULTS
During the six-month period ended December 31, 1995, Merrill Lynch
Balanced Fund for Investment and Retirement, Inc. stockholders voted
on the following proposal. The proposal was approved at a special
stockholders' meeting on January 25, 1996. The description of the
proposal and number of shares voted are as follows:
<TABLE>
<CAPTION>
Shares Voted Shares Voted Shares Voted
For Against Abstain
<S> <C> <C> <C>
1. To consider and act upon a proposal to approve the Agreement and Plan of 27,818,408 1,516,935 1,726,538
Reorganization between the Fund and Merrill Lynch Global Allocation Fund, Inc.
</TABLE>
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.
<PAGE>
* 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.
* 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.
<TABLE>
Recent Performance Results
<CAPTION>
12 Month 3 Month
12/31/95 9/30/95 12/31/94 % Change % Change
<S> <C> <C> <C> <C> <C>
ML Balanced Fund Class A Shares* $11.37 $11.56 $10.19 +14.28%(1) +0.73%(1)
ML Balanced Fund Class B Shares* 11.60 11.75 10.37 +14.51(1) +1.06(1)
ML Balanced Fund Class C Shares* 11.43 11.60 10.27 +13.97(1) +0.90(1)
ML Balanced Fund Class D Shares* 11.35 11.54 10.18 +14.19(1) +0.73(1)
ML Balanced Fund Class A Shares--Total Return* +19.62(2) +3.96(3)
ML Balanced Fund Class B Shares--Total Return* +18.25(4) +3.62(5)
ML Balanced Fund Class C Shares--Total Return* +18.34(6) +3.64(7)
ML Balanced Fund Class D Shares--Total Return* +19.26(8) +3.83(9)
S&P 500/ML B0A0 Blended Index--Total Return** +28.27 +5.32
<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.
(1)Percent change includes reinvestment of $0.269 per share capital
gains distributions.
(2)Percent change includes reinvestment of $0.525 per share ordinary
income dividends and $0.269 per share capital gains distributions.
(3)Percent change includes reinvestment of $0.365 per share ordinary
income dividends and $0.269 per share capital gains distributions.
(4)Percent change includes reinvestment of $0.376 per share ordinary
income dividends and $0.269 per share capital gains distributions.
(5)Percent change includes reinvestment of $0.294 per share ordinary
income dividends and $0.269 per share capital gains distributions.
(6)Percent change includes reinvestment of $0.434 per share ordinary
income dividends and $0.269 per share capital gains distributions.
(7)Percent change includes reinvestment of $0.311 per share ordinary
income dividends and $0.269 per share capital gains distributions.
(8)Percent change includes reinvestment of $0.498 per share ordinary
income dividends and $0.269 per share capital gains distributions.
(9)Percent change includes reinvestment of $0.351 per share ordinary
income dividends and $0.269 per share capital gains distributions.
</TABLE>
PERFORMANCE DATA (continued)
<TABLE>
Performance Summary--Class A Shares
<CAPTION>
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<S> <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
1995 10.19 11.37 0.269 0.525 +19.62
------ ------
Total $3.297 Total $4.423
Cumulative total return as of 12/31/95: +96.44%**
<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
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**
<S> <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
1995 10.37 11.60 0.269 0.376 +18.25
------ ------
Total $3.799 Total $4.352
Cumulative total return as of 12/31/95: +133.23%**
<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>
<TABLE>
Performance Summary--Class C Shares
<CAPTION>
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<S> <C> <C> <C> <C> <C>
10/21/94--12/31/94 $11.74 $10.27 $0.885 $0.246 - 2.86%
1995 10.27 11.43 0.269 0.434 +18.34
------ ------
Total $1.154 Total $0.680
Cumulative total return as of 12/31/95: +14.97%**
<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>
Performance Summary--Class D Shares
<CAPTION>
Net Asset Value Capital Gains
Period Covered Beginning Ending Distributed Dividends Paid* % Change**
<S> <C> <C> <C> <C> <C>
10/21/94--12/31/94 $11.66 $10.18 $0.885 $0.262 - 2.82%
1995 10.18 11.35 0.269 0.498 +19.26
------ ------
Total $1.154 Total $0.760
Cumulative total return as of 12/31/95: +15.90%**
<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>
Average Annual Total Return
% Return Without % Return With
Sales Charge Sales Charge**
Class A Shares*
Year Ended 12/31/95 +19.62% +13.34%
Five Years Ended 12/31/95 +11.28 +10.08
Inception (10/27/88)
through 12/31/95 + 9.86 + 9.04
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
<PAGE>
% Return % Return
Without CDSC With CDSC**
Class B Shares*
Year Ended 12/31/95 +18.25% +14.25%
Five Years Ended 12/31/95 +10.12 +10.12
Ten Years Ended 12/31/95 + 8.63 + 8.63
[FN]
*Maximum contingent deferred sales charge is 4% and is reduced to 0%
after 4 years.
**Assuming payment of applicable contingent deferred sales charge.
% Return % Return
Without CDSC With CDSC**
Class C Shares*
Year Ended 12/31/95 +18.34% +17.34%
Inception (10/21/94)
through 12/31/95 +12.38 +12.38
[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*
Year Ended 12/31/95 +19.26% +13.00%
Inception (10/21/94)
through 12/31/95 +13.15 + 8.15
[FN]
*Maximum sales charge is 5.25%.
**Assuming maximum sales charge.
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS
<CAPTION>
Face Percent of
Industries Amount* Corporate Bonds Cost Value 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 $ 10,709,600 1.7%
5,000,000 Landeskreditbank, N.V., 7.875% due
4/15/2004 4,972,067 5,609,500 0.9
Total Investments in Corporate Bonds 15,009,967 16,319,100 2.6
Country Foreign Government & Agency Obligations
Italy 5,000,000 Republic of Italy, 8.75% due 2/08/2001 5,373,050 5,582,820 0.9
Total Investments in Foreign Government
& Agency Obligations 5,373,050 5,582,820 0.9
US Government & Agency Obligations
United States Federal Home Loan Mortgage Corp.,
REMIC (a):
10,000,000 Series, 6.30% due 5/15/2008 9,210,937 9,826,563 1.5
4,910,000 1243-HP, 5.625% due 2/25/2015 4,788,017 4,854,763 0.8
Federal National Mortgage Association:
9,251,954 8% due 10/01/2024 8,834,170 9,581,508 1.5
18,717,881 8% due 12/01/2024 18,387,394 19,384,612 3.0
US Treasury Notes:
55,000,000 7.875% due 8/15/2001 53,943,600 61,427,850 9.6
25,000,000 6.25% due 2/15/2003 25,710,937 26,082,000 4.1
22,000,000 US Treasury STRIPS++, 5.35% due
5/15/2000 (b) 16,747,244 17,468,880 2.7
Total Investments in US Government
& Agency Obligations 137,622,299 148,626,176 23.2
Foreign Obligations
Germany DM 31,000,000 Bundes, 5.75% due 8/20/1998 22,444,131 22,528,630 3.5
Total Investments in Foreign
Obligations 22,444,131 22,528,630 3.5
<PAGE>
Total Investments in Corporate Bonds,
Foreign Government & Agency
Obligations, US Government & Agency
Obligations & Foreign Obligations 180,449,447 193,056,726 30.2
Shares
Held US Stocks
Basic Industry
Aluminum 125,000 Aluminum Co. of America (ALCOA) 6,893,308 6,609,375 1.0
Chemicals 61,000 Dow Chemical Company (The) 4,633,938 4,292,875 0.7
150,000 du Pont (E.I.) de Nemours & Co. 10,389,955 10,481,250 1.7
90,000 Engelhard Corporation 2,751,452 1,957,500 0.3
140,000 IMC Fertilizer Group, Inc. 4,196,080 5,722,500 0.9
55,000 PPG Industries, Inc. 2,464,430 2,516,250 0.4
Packaging 50,000 Crown Cork & Seal Co., Inc. 1,912,840 2,087,500 0.3
Paper 60,000 ALCO Standard Corp. 2,644,460 2,737,500 0.4
Total Basic Industry 35,886,463 36,404,750 5.7
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued)
<CAPTION>
Shares Percent of
Industries Held US Stocks Cost Value Net Assets
Capital Spending
<S> <C> <S> <C> <C> <C>
Aerospace 125,000 Boeing Company (The) $ 7,925,190 $ 9,796,875 1.5%
75,000 Crane Company 2,691,213 2,765,625 0.4
135,000 United Technologies Corp. 10,853,255 12,808,125 2.0
Communication 100,000 ADC Telecommunications, Inc. 3,538,774 3,625,000 0.6
Equipment 100,000 DSC Communications Corp. 4,052,678 3,687,500 0.6
<PAGE>
Computer Equipment 50,000 cisco Systems, Inc. 4,037,500 3,731,250 0.6
Computer Services 175,000 Computer Sciences Corp. 6,650,971 12,293,750 1.9
240,000 General Motors Corp. (Class E) 9,927,011 12,480,000 1.9
Electrical Equipment 165,000 General Electric Co. 9,160,779 11,880,000 1.9
Electronics 90,000 Solectron Corp. 2,554,952 3,971,250 0.6
Environmental 550,000 Wheelabrator Technologies, Inc. 7,310,684 9,212,500 1.4
Control
Hotel/Gaming 114,000 ITT Corp. 4,221,738 6,042,000 0.9
Machinery & 150,000 York International Corp. 6,687,115 7,050,000 1.1
Equipment
Miscellaneous-- 100,000 Minnesota Mining & Manufacturing Co. 6,841,105 6,625,000 1.0
Capital Spending
Office Equipment 380,000 Danka Business Systems PLC (ADR)(c)(1) 6,702,445 14,012,500 2.2
60,000 Harris Corp. 3,469,309 3,277,500 0.5
Process Controls 5,300 Johnson Controls, Inc. 325,605 364,375 0.1
Semiconductors 50,000 Texas Instruments, Inc. 3,771,749 2,587,500 0.4
Total Capital Spending 100,722,073 126,210,750 19.6
Consumer Cyclicals
Appliances 230,000 Singer Co. N.V. (ADR)(c)(1) 6,382,382 6,411,250 1.0
Automotive 305,000 Ford Motor Company 9,068,012 8,845,000 1.4
<PAGE>
Automotive Equipment 114,000 ITT Industries Inc. 1,947,220 2,736,000 0.4
55,000 Magna International, Inc. (ADR)(c)(1) 2,005,798 2,378,750 0.4
Retail 95,000 Sears, Roebuck and Co. 2,561,323 3,705,000 0.6
Total Consumer Cyclicals 21,964,735 24,076,000 3.8
</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
Consumer--Services 225,000 H & R Block, Inc. $ 8,896,652 $ 9,112,500 1.4%
Foods 70,000 General Mills, Inc. 3,396,222 4,042,500 0.6
Healthcare 400,000 Humana Inc. 8,564,795 10,950,000 1.7
Household Products 50,000 Clorox Company 3,953,875 3,581,250 0.6
75,000 Colgate-Palmolive Company 5,610,750 5,268,750 0.8
Pharmaceuticals 110,000 American Home Products Corp. 8,542,162 10,670,000 1.7
70,000 Merck & Co., Inc. 4,188,187 4,602,500 0.7
Photography 160,000 Eastman Kodak Co. 8,746,145 10,720,000 1.7
Restaurants 29,500 Darden Restaurants Inc. 316,286 350,313 0.1
Total Consumer Staples 52,215,074 59,297,813 9.3
Credit-Sensitive & Financial Services
<PAGE>
Banking 250,000 The Bank of New York Co. 7,473,216 12,187,500 1.9
15,000 The Bank of New York Co. (Warrants)(d) 168,750 541,875 0.1
100,000 BankAmerica Corp. 4,765,703 6,475,000 1.0
Insurance 140,000 Aetna Life & Casualty Co. 8,227,835 9,695,000 1.5
155,000 Allstate Corp. 4,889,885 6,374,375 1.0
114,000 ITT Hartford Group, Inc. 4,188,594 5,514,750 0.9
70,000 National Re Corp. 2,016,028 2,660,000 0.4
Total Credit-Sensitive & Financial
Services 31,730,011 43,448,500 6.8
Energy
Oil--Integrated 275,000 Chevron Corp. 13,883,842 14,437,500 2.3
125,000 Mobil Oil Corp. 9,757,153 14,000,000 2.2
Total Energy 23,640,995 28,437,500 4.5
Utilities
Utilities-- 180,000 GTE Corp. 5,790,102 7,920,000 1.2
Communications 180,000 SBC Communications Inc. 8,015,735 10,350,000 1.6
310,000 WorldCom, Inc. 7,317,232 10,927,500 1.7
Total Utilities 21,123,069 29,197,500 4.5
Total Investments in US Stocks 287,282,420 347,072,813 54.2
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (continued)
<CAPTION>
Shares Percent of
Industries Held Foreign Stocks Cost Value Net Assets
Australia
<S> <C> <S> <C> <C> <C>
Media/Publishing 600,000 News Corp. Ltd. (Preferred)(ADR)
(c)(1) $ 10,451,056 $ 11,550,000 1.8%
<PAGE>
Canada
Appliances 280,000 Semi-Tech Corp. 4,108,297 1,949,718 0.3
Hong Kong
Banking 286,378 HSBC Holdings PLC 1,750,973 4,333,449 0.7
Indonesia
Telecommunications 20,000 P.T. Indonesian Satellite (ADR)(c)(1) 701,901 730,000 0.1
60,000 P.T. Telekomunikasi Indonesia 1,357,585 1,515,000 0.2
Tobacco 74,500 P.T. Hanjaya Mandala Sampoerna 415,075 776,313 0.1
Japan
Electronics 70,000 Advantest Corp. 3,441,308 3,593,568 0.6
45,000 Kyocera Corp. 3,995,841 3,343,181 0.5
240,000 Sharp Corp. 3,564,993 3,835,723 0.6
75,000 Tokyo Electron Ltd. 2,928,405 2,905,850 0.5
Financial Services 360,000 Nomura Securities Co., Ltd. 7,080,991 7,845,796 1.2
Insurance 250,000 Tokio Marine & Fire Insurance Co. 2,976,505 3,269,082 0.5
Office Equipment 150,000 Canon, Inc. 2,752,380 2,716,970 0.4
Mexico
Multi-Industry 433,800 Grupo Carso, S.A. de C.V. (ADR)(c)(1) 3,832,850 4,392,225 0.7
Netherlands
Computer Services 112,800 Getronics N.V. 4,941,210 5,282,548 0.8
Norway
Telecommunications 120,000 Nera AS 3,422,047 3,913,064 0.6
<PAGE>
Banking
Banking 354,300 Espirito Santo Financial Holdings
S.A. (ADR)(c)(1) 4,675,168 4,207,312 0.7
Total Investments in Foreign Stocks 62,396,585 66,159,799 10.3
Total Investments in US & Foreign
Stocks 349,679,005 413,232,612 64.5
</TABLE>
<TABLE>
SCHEDULE OF INVESTMENTS (concluded)
<CAPTION>
Face Percent of
Amount* Issue Cost Value Net Assets
<S> <C> <S> <C> <C> <C>
Commercial Paper** $10,000,000 British Gas Capital Corp., 5.72%
due 1/08/1996 $ 9,985,700 $ 9,985,700 1.6%
12,000,000 Goldman Sachs Group L.P., 5.75% due
1/03/1996 11,992,333 11,992,333 1.9
8,727,000 Morgan Stanley Group, Inc., 5.65%
due 1/22/1996 8,695,498 8,695,498 1.3
Total Investments in Short-Term
Securities 30,673,531 30,673,531 4.8
Total Investments $560,801,983 636,962,869 99.5
============
Other Assets Less Liabilities 3,420,105 0.5
------------ ------
Net Assets $640,382,974 100.0%
============ ======
Net Asset Value: Class A--Based on net assets of $30,814,203 and
2,710,630 shares outstanding $ 11.37
============
Class B--Based on net assets of $136,519,799 and
11,766,611 shares outstanding $ 11.60
============
Class C--Based on net assets of $1,221,940 and
106,909 shares outstanding $ 11.43
============
Class D--Based on net assets of $471,827,032 and
41,555,739 shares outstanding $ 11.35
============
<PAGE>
<FN>
(a)Real Estate Mortgage Investments Conduits (REMIC).
(b)Represents a zero coupon bond; the interest rate shown is the
effective yield at the time of purchase by the Fund.
(c)American Depositary Receipts (ADR).
(d)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.
*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>
OFFICERS AND DIRECTORS
Arthur Zeikel, President and Director
James H. Bodurtha, Director
Herbert I. London, Director
Robert R. Martin, Director
Joseph L. May, Director
Andre F. Perold, Director
Terry K. Glenn, Executive Vice President
Richard L. Reller, Senior Vice President
Donald C. Burke, Vice President
Denis B. Cummings, Vice President and
Portfolio Manager
Gerald M. Richard, Treasurer
Jerry Weiss, Secretary
<PAGE>
Custodian
The Chase Manhattan Bank, N.A.
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
